Spain-based Inditex, which owns fashion brand Zara, will close as many as 1,200 stores around the world as the clothing retailer tries to battle the impact of the COVID-19 pandemic. Recently posting its first-ever quarterly loss, it announced it would ‘absorb’ up to 16 per cent of its global outlets, directing sales at those stores to nearby locations to create a fleet of bigger units.
The closures, to be effective this year and the next and expected to be concentrated in Asia and Europe, will affect smaller stores of Zara, Massimo Dutti, Stradivarius and other banners that account for around 5-6 per cent of sales.Inditex, which owns fashion brand Zara, will close as many as 1,200 stores around the world as it tries to battle the impact of the COVID-19 pandemic. Recently posting its first-ever quarterly loss, it announced it would 'absorb' up to 16 per cent of its global outlets, directing sales at those stores to nearby locations to create a fleet of bigger units. #
The total Inditex store count will fall from 7,412 to between 6,700 and 6,900 after the reorganisation, which will also include the opening of 450 new shops, according to European media reports.
The “headcount will remain stable”, with staff offered roles in other jobs like dispatching online purchases, Inditex said.
Inditex’s has been badly affected during the pandemic, with sales down by 44 per cent to €3.3 billion (£2.9 billion) between 1 February and 30 April. The company reported a net loss of €409 million during the quarter. Almost a quarter of its shops were closed by June 8.
However, online sales, which rose by 50 per cent year on year (YoY) during the quarter and were up by 95 per cent (YoY) in April, compensated for some of the sales weakness, Inditex said.
Inditex said it would accelerate its push to sell more clothes online as it seeks to fend off the challenge of high street competitors such as H&M, Uniqlo owner Fast Retailing and newer online-only rivals, including Asos and Boohoo in the United Kingdom which have prospered during lockdown.
The 107 Inditex stores in the United Kingdom are reportedly less likely to be significantly affected.
Under Inditex’s new plan, online sales will account for more than 25 per cent of the total by 2022, compared with 14 per cent in fiscal 2018-19. Larger stores will act as distribution hubs for online sales.
The company plans to spend €1 billion on its online offering by 2022 and a further €1.7 billion in stores to allow them to integrate better with websites for faster deliveries and real-time tracking of products.
Fibre2Fashion News Desk (DS)
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