For the first time, Zara owner Inditex’s sales dipped by 28 per cent due to COVID lockdowns and related staggered reopening during FY21. The fashion house had consistently posted profits in India since entering the country in 2010.
Revenues of Zara’s joint venture partner with Tata, Inditex Trent, which runs 21 stores in India declined to Rs 1,126 crore in FY21. The company posted a net loss of Rs 41 crore as per Trent’s annual report. It had posted a profit of Rs 104 crore in the previous year.
FY21 started with significant uncertainty for Trent due to the pandemic. The company’s operating profit was hit by a drop in sales and restaurants profits due to COVID-related lockdowns and trade restrictions.
Trent also operates Massimo Dutti stores in India whose revenues dropped by 50 per cent to Rs 34 crore in FY21 with a net loss of Rs 8 crore.
Although malls reopened in rest of the country in June major markers such as Delhi and Mumbai allowed malls to reopen only a month later. E-commerce sales picked up as malls and stores remain closed for the entire first quarter of the financial year 2021 but could not make up for the revenue loss due to the closure of brick and mortar stores.
Zara is also facing tough competition from other luxury apparel brands in a highly crowded market. The brand just opened one store in the past four years and closed one store in the last year.
