Coronavirus: Zara owner Inditex shuts 3,785 stores globally as sales plunge

Covid-19 has had 'very significant impact' on sales, retailer warns

The owner of Zara has closed 3,785 stores globally after the coronavirus pandemic sent sales plunging by a quarter in the first two week of March.

Spanish group Inditex, which owns Zara as well as Pull & Bear and Bershka, said it had been forced to temporarily close stores in 39 countries after Covid-19 had a "very significant impact" on sales.

The group has temporarily shut all of its stores in Spain after the country entered a government-enforced lockdown on Saturday. Most of its stores in China remain open, following local health authorities' guidelines.

Sales for the group dropped 24.1 per cent globally in the first two weeks of March as the first round of store closures came into effect. Inditex said it was too early to quantify the virus' effect on future revenues.

The news came as three of the UK's largest bar and restaurant operators warned that social distancing measures would have severe impacts on trade.

Inditex has accounted for a €287m (£263m) hit from the outbreak so far because its stock for the spring/summer season is now worth less than before.

The group said in a statement: "As Covid-19 has spread around the world, the Group has been introducing and implementing the procedures needed to prevent transmission since the beginning of the outbreak, closing stores as necessary in certain areas. It intends to continue to fully cooperate with the health authorities.

"The spring-summer collections were initially very well received by our customers in February. However, the global expansion of Covid-19 has since had an impact in certain markets."

Retailers are struggling to cope with a sharp drop-off in sales as people are told to stay home and self-isolate to stop the virus spreading.

The UK government announced a £350bn package of loans and grants on Tuesday to help sectors most affected by social distancing measures, but business groups said more help is needed.

Inditex's update came as it reported a jump in sales and earnings for the year to 31 January. Net sales increased by 8 per cent to €28.3bn (£25.9bn), largely thanks to a 23 per cent jump in online sales

Meanwhile, the company's earnings before tax and interest increased to €7.6bn from € 5.5bn in the previous year.