Inditex’s e-commerce explosion

by | Jun 11, 2020

What global pandemic? The world’s largest fashion group, Inditex, isn’t even fazed.

The Spanish fashion giant, which owns Zara, is planning to spend an outstanding $3 billion on online operations and premium stores around the world over the next three years, despite the fact that clothing retailers have been hit especially hard by the coronavirus pandemic.

Their strategy includes investing $1.1 billion in its digital operations and closing 1200 stores around the world, instead focusing on opening 450 higher quality, larger outlets in premium locations.

  • The coronavirus has accelerated the trend towards online shopping, and retailers like Inditex are racing to adapt to what they view as lasting changes to the way that people shop

Inditex revealed its online sales increased 95% in April from the same month last year, and were up 50% in the first quarter.

  • It expects online sales to reach more than 25% of total sales by 2022, up from 14% in 2019

Inditex’s $3 billion spending plan is impressive given the disruptions to their cash flow during the pandemic.

  • Cash flow represents the money coming in and going out of a company or organization during a specific accounting period.

Inditex posted a loss of $464.8 million for the three months leading up to April.

  • For comparison, they made a profit of $834.2 million in the same period a year ago.

Still, the company is continuing to invest in its online infrastructure, which will surely give it a leg up in the post-pandemic future.

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