Zara's parent company to shut down over 12,000 stores worldwide
The parent company of fast-fashion brand Zara will close as many as 1,200 stores around the world. The move comes as the clothing retailer tries to boost online sales in the aftermath of the Covid-19 pandemic.
Inditex said it would “absorb” between 1,000 and 1,200 mainly smaller stores, with losses concentrated among older shops from brands other than Zara. Closures are expected to be concentrated in Asia and Europe. It is understood that the 107 Inditex stores in the UK are less likely to be significantly affected.
The company reported a net loss of $416 million during the quarter. However, online sales growth made up for some of the sales weakness, Inditex said. Online sales rose by 50% year-on-year during the quarter and were up 95% year-on-year in April.
Bricks and mortar retailers around the world have been forced to re-evaluate their business models during the pandemic, amid expectations of lower footfall in stores for a significant amount of time.
Under Inditex’s new plan online sales will account for more than 25% of the total by 2022, compared with 14% in its 2019 financial year. Larger stores will act as distribution hubs for online sales.