In the third quarter of the year Inditex returned to the path of profits, after posting losses in the first half for the first time in its history. The coronavirus crisis has taken its toll on the Spanish fashion giant, which has accumulated a 28.9% drop in turnover so far this year and 75% fewer profits. Due to the crisis, he had to make a provision of 308 million euros and was able to ensure that his employees did not enter an ERTE even if the stores were closed. In addition, despite the crisis situation, the textile group is immersed in a period of transformation and continues with its digital commitment, for which it will invest 2,700 million until 2022, of which 1,000 million will go entirely to the reinforcement of its online channel .
Inditex’s objective is that online sales represent 25% of the total in 2022. A percentage that may even exceed in this unusual year. And it is that the confinement has brought with it that Internet sales soar. Specifically, 75% did so in the third quarter. The chain’s forecasts are for more than 6 billion online billing to be exceeded at the end of the year, which would be around 30% of total sales, according to Bloomberg estimates.
The other side of the coin of the group’s online bet is the closure of physical stores that it is going to undertake. Specifically, the group announced after the presentation of the results of the first quarter that during this year and 2021 close between 1,000 and 1,200 stores all over the world. So far this year, a total of 272 stores have been closed, from 7,469 at the end of 2019 to 7,197 at the end of the third quarter.
As Inditex explained, the stores that close are those that consider that their useful life has ended. This will affect small stores, those whose turnover can be covered in the online channel and those with a book value of less than 260,000 euros. At the end of this recomposition, the group would have between 6,300 and 6,500 stores.
By brand, this redistribution of its stores will affect between 250-300 of Zara; 140-165 from Pull & Bear; 135-160 to Bershka; 110-130 to Stradivarius; 145-175 to Oysho; 100-120 from Zara Home; 110-135 to Massimo Dutti; and between 10-15 from Uterqüe. So far, they have been closed 37 Zara, 25 Zara Kids, 21 Zara Home, 50 Pull & Bear, 39 Massimo Dutti, 47 Bershka, 28 Stradivarius, 23 Oysho and 2 Uterqüe.
Regarding the employment affected by the closure of stores, Inditex reached an agreement with the unions last October so that the affected people could be relocated. Thus, it is offered to work in other stores, fixing a maximum kilometer limit of 25 kilometers and always prioritizing vacancies in nearby stores in the same city or neighboring towns. Furthermore, if the transfer involves a change of address, the company will reimburse the moving expenses and pay the expenses incurred in the transfer up to a limit of 3,000 euros. Those who do not accept these conditions may be compensated by the company.