Zara owner takes $320-million hit from coronavirus

MADRID, Spain – Spanish textiles giant Inditex, owner of the Zara chain of fashion shops, said Wednesday, March 18, it was taking a charge of 287 million euros ($320 million) in its 2019 results because of the coronavirus crisis.

The company said net profit for its year to end-January 2020 was 3.6 billion euros, a gain of 6% with the charge, but which would have been 12% without it.

Analysts surveyed by Factset had expected net profit of 3.8 billion euros.

Inditex said it was suspending its dividend to protect the business in a health crisis which has forced it to close half of its shops around the world.

Sales for the year came in at 28.3 billion euros, up 8% and in line with forecasts.

“It is too early to give an outlook for 2020,” given the volatility generated by the coronavirus outbreak, the company said.

The impact so far, however, has been “very significant,” it added.

Of its 7,469 boutiques around the world, “3,785 are currently closed temporarily in 39 markets,” it said.

At the same time, it said nearly all its shops in China, a key market and producer of its goods, had reopened as the authorities pegged back the virus.

Inditex, which owns other top brands such as Massimo Dutti, Bershka, and Stradivarius, said its online sales operations – about 10% of the total – were normal in all its markets, as were its supply chains. – Rappler.com