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Inditex, a Spanish multinational clothing company, which owns the Zara and Bershka brands, announced a 70% fall in net income for the year ended 31 January 2021.
The group said net income came to €1.1 billion (around R19 billion) compared to €3.6 billion (around R64 billion) for 2019.
The Spanish multinational said despite the disruption caused by the lockdowns and restrictions which hampered their sales, the strength of the business model is reflected in the high sales productivity.
Total store and online sales in constant currency were down 24.5% compared to 2019. Trading hours were down 25.5% and 30% of its global stores were shut by 31 January. Over half of its other retail locations experienced trading restrictions due to local limitations, said the group.
The group said the pandemic led to its strategic transformation which includes a focus on shifting to online sales. Online sales came to €6.6 billion (around R117 billion) and grew 77% in constant currencies. Ninety-five percent of online growth in the year was organic.
The group said in 2020, Zara launched online stores in 25 markets and expects online sales to continue growing at a significant rate.
Inditex announced in June 2020 that it would be closing 1 000 to 1 200 retail stores within the next year and would concentrate on e-commerce and online sales.
The group said the digital transformation plan culminated with the absorption of 751 smaller and older stores. While 111 stores in 29 markets, fitted with next-generation technology were opened. The group now has 6 829 stores globally and nine in South Africa.
Inditex said it incurred extraordinary expenses related to Covid-19 of €394 million in the second quarter of 2020.
