Inditex falls to loss and plans €2.7bn investment in online shopping and store rejig

Inditex, the owner of the Zara, Massimo Dutti, Pull&Bear and Bershka clothes chains, says it will invest €2.7bn over the next two years to step up its focus on online shopping and large stores, while closing up to 1,200 of its smaller stores.

The Spanish group reported an underlying first-quarter loss of €175mln after being forced to shut 88% of its stores in the three months to end-April because of the coronavirus.

After taking a €308mln provision meant it reported a net loss of €409mln.

Sales at constant currencies in the quarter fell 44% year-on-year to €3.3bn and since then have dropped 51% in May and eased to 34% in the first week of June.

This was helped by online sales growing 50% during the first quarter, with a 95% increase in April.

Net cash remained impressive at €5.8bn, though down from €6.7bn a year earlier.

Executive chairman Pablo Isla said he expected online sales to account for more than a quarter of the group total by 2022, compared to 14% now.

He said the headcount will remain stable and that portfolio of larger stores will be concentrated on strategic shopping districts in larger cities, with “higher levels of profitability, and helping generate 4-6% like-for-like growth annually”.

The shares were up 1.5% to €26.06 in Madrid on Wednesday morning.

Story by ProactiveInvestors