Whatâs Going On Here?Inditex â the worldâs largest clothing retailer â was left feeling pretty exposed on Wednesday after revealing it made its first-ever loss as a public company last quarter. What Does This Mean?Inditex â owner of fashion chains Zara, Massimo Dutti, and Berskha â 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 â which contributes much less to Inditexâs sales than its stores do â couldnât make up for the 90% of outlets that were shuttered in April. Add the companyâs $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 itâll better match Inditexâs style: May kicked off with another 51% drop in sales, sure, but theyâre âonlyâ down 34% so far in June â 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. Why Should I Care?For markets: Fast and furious.
Inditexâs 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 â a major competitive advantage in todayâs fast-fashion environment â while rival H&M keeps customers waiting for closer to six months.
For you personally: Sitting pretty.
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 companyâs under less pressure than its less well-off competitors to shift idle stock by offering hefty discounts (tweet this). Primark â the low-cost fashion retailer that famously doesnât have an ecommerce business â has also said it won't offer discounts when it reopens either. | 