Zara-owner Inditex said today the coronavirus pandemic had dealt a significant blow to its business with sales in the first two weeks of March plunging 24.1% and nearly 4,000 stores temporarily closed around the world.
The cash-rich fashion group said it would book a provision of €287m as the outbreak reduces the value of its spring/summer inventory.
It also said it would postpone a decision on whether to pay out the 2019 annual dividend until later in the year.
"The solidity of the group's 2019 earnings and strong balance sheet puts us in a strong position for tackling the challenges emerging in 2020," the company said in a statement.
Unlike many retailers struggling to adapt to changing shopping habits, Inditex has a pile of cash in its coffers. Net cash stood at €8.06 billion at the end of the year, the company said, up 20% on year.
Retailers like Nike, Urban Outfitters and Under Armour have closed stores in the USs and other markets as they move to limit the spread of the coronavirus.
In a sign of how the sudden drop in demand can hurt stores already struggling from falling sales, furniture and clothing retailer Laura Ashley said this week it intended to appoint administrators as the pandemic kept shoppers away.
Inditex has temporarily shut all its stores in domestic market Spain where there has been a nationwide lockdown since Saturday with a government-ordered closure of bars, restaurants and shops selling non-essential items.
Spain is the second-worst affected country by the coronavirus outbreak in Europe after Italy and accounts for the fashion retailer's largest network of stores by far.
Inditex reported annual net profit of €3.64 billion, up 6% from the same time a year ago. The growth would have been 12% had it not been for the booked provision, the company said.
The company said online sales were continuing and the group's supply chain was functioning normally.
All stores in China but 11 were open, the company said.
Inditex has over 600 stores in China, around a third of which are fast-fashion leader Zara.
