Inditex says its full-year net profit tanked 70% due to COVID-19 restrictions

Inditex (ETR: IXD1) said on Wednesday that its net profit in 2020 came in at £940 million that represents a broader than expected 70% decline on a year over year basis. The company attributed its dovish performance to the ongoing Coronavirus pandemic that pushed its stores into temporarily shutting down last year.

Inditex shares (learn how to buy shares for beginners) opened more than 1.5% down on Wednesday but recovered most of the intraday loss in the next hour. The stock now has a per-share price of £24.72 versus £22.13 per share at the start of 2021.

Inditex reports £5.40 billion of sales in Q4

Inditex said that its net profit in the fourth quarter stood at £372.60 million – a 53% annualised decline. The owner of prominent brands like Zara generated £5.40 billion of sales in the recent quarter. In the prior quarter (Q3), Inditex had noted £1.69 billion of EBITDA.

As of March 8^th, Inditex said that roughly 15% of its shops across the globe were still closed for the public due to the COVID-19 crisis. Experts had forecast the Spanish multinational to report £515.65 million of net profit in Q4.

The fast-fashion retailer valued its full-year total sales at £17.47 billion in 2020, or 28% lower than the previous year. This was despite a massive 77% surge in digital sales last year. Inditex also resumed its ordinary dividend policy recently.

Inditex wants to close 1,200 of its stores

Inditex is currently in the process of closing 1,200 stores to expand its investment in flagship locations via which it wishes to cater to in-person as well as online customers. 751 of these stores, as per the Arteixo-based firm, have been closed so far.

Executive Chairman Pablo Isla commented on the financial update on Wednesday and said:

“The digital transformation initiated in 2012, which is built around the integrated store and online sales platform, has proven to be the right strategy. Inditex as a company is stronger today than it was two years ago, with a unique business model and a global, flexible, digitally integrated and sustainable sales platform, which places us in an excellent position for the future.”

Inditex performed fairly downbeat in the stock market last year with an annual decline of a little under 20%. At the time of writing, it is valued at £77.31 billion and has a price to earnings ratio of 56.74.