Despite the major impact of the corona pandemic, Inditex returned to profitability in the second quarter. Online growth is particularly strong and the retailer is taking further steps in its digital transformation.
Inventory management and cost reductions
With gross operating profit in excess of 1 billion euros and a net profit of 214 million euros in the second quarter, fashion group Inditex – known for brands such as Zara, Massimo Dutti, Pull & Bear and Bershka – performed significantly better than expected. In the first quarter the figures turned red as a result of the corona pandemic, but the worst now seems to be over. According to the retailer, the third quarter shows a further return to normality, with retail sales gradually recovering.
Turnover still fell sharply: -31% (compared to -44% in the first quarter). Logical: in May, 87% of the group’s physical stores were still closed. Meanwhile, 98% of the stores worldwide are open again. Inditex managed to maintain its margins through strict stock management and cost reductions. Meanwhile, online sales are growing exponentially: sales increased by 74% in the first half year and for the first time the retailer processed one million orders in one day.
New Zara app
Digital transformation remains a priority for the group. A striking example is the new Zara app, which Inditex is now rolling out in Spain: it allows customers to use their smartphone to consult the available assortment in a store of their choice, place an order and pick it up within half an hour. In stores, the app allows customers to quickly find products thanks to the use of RFID technology. The app also makes it possible to reserve a fitting room and pay on the go.
CEO Pablo Isla stressed that “the recovery and strong performance are due to the hard work, engagement and creativity of everyone in Inditex. I am particularly pleased with our online sales growth, which demonstrates the critical importance of our integrated store and online platform strategy. This is a cornerstone of our unique business model with three key pillars flexibility, digital integration and sustainability. Day by day this combination is proving its solidness.”
