Yes… And it isn’t just Zara (aka Inditex, its parent company)… Many luxury brands are expected to take a big hit this quarter due to coronavirus and lockdown.
For instance, Hennes & Mauritz, a multinational clothing retail – popularly known as just H&M – too, expects to see its first March-May quarterly loss in decades.
Talking about Zara…
Its parent company Inditex, which also owns brands like Bershka, recorded the first loss as a public company. (“Public company” is a keyword here.) It will close up to 1,200 fashion stores around the world.
But then there’s little they have to worry about. For one, the segments they target, they are relatively less responsive to economic downturns. Meaning, they’re going to continue buying from luxury brands irrespective of how the situation is.
Besides, this is less of a loss and more of a knock in the head.
One of the biggest problems that these legacy brands have always had is their failure to adopt; failure to stay ahead of the curve. With the world shopping online, their digital footprint remains feeble. They still rely more on in-store sales. This pandemic was clearly a turning point for them to see the trends – to see where the world is moving forward – and how they and must adapt. Inditex has already announced to invest $3 billion to bolster its e-commerce operations for brands like Zara. It plans to generate more than a quarter of sales online by 2020. (Finally!! But even a quarter seems too low. They should go harder on digital platforms.)
So, yes, coming to your question…
(Courtesy: Business of Fashion)
It’s true that Zara owner reported its first-ever loss as a public company. But like I said, it isn’t something they would be too worried about. If you’ve purchased their stocks, their future still looks solid.
In the end, this event sure highlights the big economic slump that the world stares at. If a big brand is going through difficult times, one can only think of what the SMEs and newer brands are going through in unprecedented times like today.