Data: Four charts that lay bare Inditex’s ‘challenging’ year

Like many of its fashion counterparts, Inditex suffered sharp falls in sales and profits during the past year, as store closures due to lockdowns impacted its performance in multiple markets.

The retailer’s net sales dropped 28% to €20.4bn (£17.5bn) in the year to January 31, while profits tumbled 69.4% to €1.1bn (£940m).

Inditex, which includes brands including Zara, Zara Home, Pull & Bear, Bershka, Massimo Dutti and Stradivarius, operates 6,829 stores.

The retailer has been on a drive to right-size and refit its portfolio over the past year, closing 750 stores and refurbishing or enlarging 96.

With a bricks-and-mortar presence in 100 markets, Inditex experienced lockdowns and store closures in different countries across the globe and, as of March 8, 15% of its estate remains temporarily closed. However, all of its stores are expected to be open again by April 12, when non-essential shops in England are allowed to resume trading. 

Stores open

A key development for Inditex throughout 2020 was establishing a forensic view of its inventory across all of its brands and markets.

Using AI, online orders are now fulfilled from the location that makes the most sense stock-wise – which could be a store or a warehouse.

That has allowed Inditex to maintain strong availability across the different regions in which it operates and, therefore, achieve greater levels of full-price sales.

Despite store closures and a 25.5% reduction in trading hours, Inditex maintained relatively strong operating performance.  

At the peak of lockdown in April, online and in-store sales globally plummeted to 28% of 2019 levels, but recovered to 94% in October, before England entered another national lockdown. 

Prior to the pandemic, Inditex sales had been growing and were 8% up last February compared to the same month in 2019. 

Store and online sales

Inditex’s ecommerce sales have rocketed during the pandemic as consumers shifted spending to digital channels – a trend the group sought to take advantage of by launching Zara online in 25 new countries.

Customer engagement soared, with site visits up 50% year-on-year to 5.3bn, while active app users reached 132m.

Overall, Inditex recorded an uptick in online sales of 77% in local currencies to €6.6bn (£5.6bn), which helped to offset some of the negative impact of store closures. 

The retailer attributed a large portion of this to its single inventory proposition, which it said boosted online sales to the tune of €1.2bn (£1bn) during the course of the year, as it has allowed Inditex to be ”more responsive, adaptable and agile”.

Online sales

Despite its full-year profit and sales decline, chief executive Pablo Isla insists that Inditex has “emerged stronger” from the Covid-19 crisis – and sales are rebounding.

Isla believes the retailer’s digital transformation strategy, built around its single view of inventory, has worked in its favour.

“Inditex as a company is stronger today than it was two years ago, with a unique business model and a global, flexible, digitally integrated and sustainable sales platform, which places us in an excellent position for the future,” he says.

The retailer says its new spring/summer collections have been well received by customers so far, and online sales have continued to grow at the same rate seen in 2020 so far this financial year. Store and online sales combined were down just 4% in the week beginning March 1, compared to the same week in 2020.

Excluding Inditex’s five biggest markets still operating under lockdown restrictions – the UK, Brazil, Germany, Greece and Portugal – sales during the first week of March increased 2% year-on-year.

Sales in February and March

Despite the challenges posed by Covid-19, Inditex has also achieved many of its sustainability goals and has set ambitious new targets for 2023.

Most notably, it has surpassed its target to use 65% renewable energy in its own facilities, and to ensure 25% of its products come under its eco-conscious Join Life label.

The retailer’s targets for the next two years include achieving zero waste from its facilities, 100% use of sustainable cellulosic fibres in its garments, to be 100% free of single-use plastic and to collect 100% of all packaging materials for recycling or reusing within its supply chain.

Inditex’s sustainability goals