Zara Continues to See Uneven Sales As More COVID-19 Store Closures Loom
Zara is continuing to experience uneven sales trends amid the ongoing coronavirus pandemic.
As new COVID-19 restrictions come into effect in the U.K., Germany and the Netherlands, the retailer — whose parent firm Inditex reported on Tuesday moderate revenue declines of 6% for the third quarter — may have to temporarily shutter stores again.
Inditex said Tuesday that its path to recovery has been “materially affected by the health crisis,” with Zara‘s sales showing strong bounce-back trends as stores reopened but slipping again as cases spiked and restrictions were renewed amid a so-called second wave of the coronavirus in November and early December. Meanwhile, the company’s overall Q3 online sales were up 76% year over year — although it remains to be seen how much digital growth can offset persistent store closures induced by the global health crisis.
In the third quarter, 5% of the group’s stores remained closed and 88% of its stores had restrictions. As for the current Q4 quarter, 8% of Inditex-owned stores are temporarily closed and another 10% are closed on weekends. Additionally, a “significant” number of stores have relevant restrictions in terms of space, capacity and opening hours.
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The December update comes after Inditex announced in June that it would have to shutter as many as 1,200 Zara locations permanently.
At the time, Inditex said the closures would happen so that the brand could pivot toward e-commerce. As part of its post-coronavirus strategy, it will invest about 1 billion euros, or $1.13 billion, in digital and 1.7 billion euros, or $1.93 billion, in store expansion. (Sales at its smaller locations that are set to shut down, the company added, will be either merged with neighboring locations or directed online.)
The fast-fashion retail group said that it expects a “higher-quality network of better-located stores,” in conjunction with e-commerce, to generate long-term comps of 4% to 6%.”
