Zara Owner’s Lean Business Model Helps It Cope With Pandemic
- Inditex cut costs, reduced inventory level 19% in first half
- Sales decline is moderating and is offset by online surge
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Inditex SA’s quick-reaction strategy allowed the operator of Zara stores to reduce inventory in the middle of Covid-19 lockdowns, buoying first-half earnings.
The Spanish clothing retailer managed to reduce stock-in-trade by 19% at the end of July, taking advantage of flexible purchasing agreements that allow the company to rapidly adapt to changes in demand. That softened the blow to earnings, which exceeded analysts’ estimates even though they were less than half last year’s level. The stock rose as much as 6.7% Wednesday morning.