Inditex, the Spanish owner of Zara, has announced plans to close between 1,000 and 1,200 stores globally as it accelerates its shift to online retailing following a sharp sales decline due to the coronavirus pandemic. The closures will mainly affect smaller, older stores from its other brands, including Bershka, Pull & Bear, and Massimo Dutti, with Asia and Europe expected to see the most significant impact. The company's 107 UK stores are believed to be less affected.
The restructuring will reduce Inditex's total store count from 7,412 to between 6,700 and 6,900, while 450 new stores will open. Inditex stated that headcount will remain stable, with staff offered roles in other areas such as online order dispatch. The company reported a net loss of €409 million for the first quarter of its financial year, with sales down 44% to €3.3 billion between February and April. Almost a quarter of its stores remained closed as of 8 June.
Online sales provided a bright spot, rising 50% year-on-year in the quarter and 95% in April. Inditex plans to invest €1 billion in its online offering by 2022 and €1.7 billion in stores to integrate them better with e-commerce, aiming for online sales to account for over 25% of total revenue by 2022, up from 14% in 2019. Larger stores will serve as distribution hubs for online orders.
The move comes as many brick-and-mortar retailers reassess their business models amid lower footfall expectations. In the UK, fashion brands Monsoon Accessorize and Quiz announced closures, while the Restaurant Group confirmed 125 outlets, mostly Frankie & Benny's and Garfunkel's, will not reopen, putting 3,000 jobs at risk.
