over 3 years ago • 2 mins
Inditex – the world's biggest clothing retailer – was left feeling pretty exposed on Wednesday after revealing it made its first-ever loss as a public company last quarter 👙
Inditex – owner of fashion chains Zara, Massimo Dutti, and Berskha – reported revenue for February, March, and April that was 44% lower than the same time last year. That, despite a 50% rise in its online sales last quarter: ecommerce alone – which contributes much less to Inditex’s sales than its stores do – couldn’t make up for the 90% of outlets that were shuttered in April. Add the company’s $350 million provision for store improvements into the mix, and the fashionista ended up closing the quarter almost $500 million in the red 📕
Still, this quarter looks like it’ll better match Inditex’s style: May kicked off with another 51% drop in sales, sure, but they’re “only” down 34% so far in June – and just 16% in markets that were fully open. In fact, Inditex reckons sales China, Japan, and South Korea are now completely back to normal.
Inditex’s stock rose just over 1% on Wednesday, potentially because it benefits from brands that can get the newest trends to customers almost as soon as non-essential stores reopen worldwide 🛍 The retail juggernaut takes about a month to get fresh styles into its stores – a major competitive advantage in today’s fast-fashion environment – while rival H&M keeps customers waiting for closer to six months.
Inditex now has 10% less inventory than this time last year, along with $6.6 billion worth of cash in the bank. That should mean the company’s under less pressure than its less well-off competitors to shift idle stock by offering hefty discounts. Primark – the low-cost fashion retailer that famously doesn’t have an ecommerce business – has also said it won't offer discounts when it reopens either.
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