Retail giant Inditex postpones dividend as Covid-19 hits sales
Zara owner hit by coronavirus lockdown
Inditex (ITX), the owner of Zara and Massimo Dutti, has announced that it will postpone its yearly dividend as a result of the effect of Covid-19 on the retail industry.
The Spanish retail giant also stated that almost half of its shops around the world have been closed as a result of the crisis.
The coronavirus has infected more than 77,000 Europeans with 3,500 confirmed deaths.
While Italy remains the worst-affected nation, the situation in Spain has deteriorated in the past week, with almost 14,000 cases and 623 deaths. In the past month alone, the country’s leading index, the IBEX 35, has fallen by 38.21 per cent.
All of Inditex’s Spanish stores have been closed since Saturday after the government declared a nationwide lockdown. As a result of the ongoing disruption the company’s sales in the first two weeks of March plunged by almost a quarter.
Inditex’s share price has fallen 36.97 per cent in the past month and stands down 3.99 per cent at 20.22 towards the end of Wednesday trading.
Nonetheless, compared to other retailers, the Spanish firm is strong. With a market cap of €62.8bn (£57.8bn, $68bn) Inditex experienced strong growth in the year ending 31 January. Sales for the financial year increased by 8 per cent while net profit rose from €3.44bn the year before to €3.64bn.
While it has postponed its dividend payment and booked a provision of €287m to cope with the reduced value of its spring/summer inventory, Inditex is still fundamentally strong, with a cash pile of more than €8bn.
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