Zara owner Inditex returns to profit in second-quarter

FILE PHOTO: Staff wearing protective mask waits for customers at the entrance of a Zara store, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur
FILE PHOTO: A staff wearing protective mask waits for customers at the entrance of a Zara store, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur, Malaysia May 27, 2020. REUTERS/Lim Huey Teng/File Photo

September 16, 2020

By Sonya Dowsett

MADRID (Reuters) – The owner of fashion retailer Zara, Inditex <ITX.MC>, returned to quarterly profit in the three months from May to July despite a 31% fall in sales as the coronavirus crisis kept consumers away from city centre shopping districts.

The owner of the Massimo Dutti and Bershka brands said on Wednesday that 98% of its stores had reopened.

In the current quarter, sales in store and online from Aug. 1 to Sept. 6 at constant exchange rates were down 11% from a year earlier.

Inditex reported a second-quarter net profit of 214 million euros ($253 million), beating the 96 million euro mean forecast from Refinitiv’s SmartEstimate model, which is weighted towards more recent estimates and higher-ranked analysts.

It saw a 74% jump in online sales in the first half, a trend seen at other apparel retailers as well, as shoppers bought from home with many stores closed and movement restrictions in place.

Inditex shares closed 5% higher on Tuesday after Swedish rival H&M <HMb.ST> beat quarterly profit forecasts. The stock is down 24% this year.

For the first half, it reported a net loss of 195 million euros on sales down 37%.

It said it would have reported a profit had it not booked a 308 million euro charge related to its integration of its store and online platforms.

(Reporting by Sonya Dowsett, editing by Inti Landauro and Jason Neely)