Zara's owner returns to profit in the second quarter

INDITEX Group, owner of Zara stores, posted a quarterly profit better than analysts' expectations, after the company succeeded in opening most of its branches.

During the second quarter, the group achieved EBITDA of 1.5 billion euros, better than analysts' expectations of 1.35 billion euros.

The group had incurred losses in the first quarter of this year, as a result of the coronavirus pandemic, after revenues declined by 44%.

Inditex plans to invest 2.7 billion euros (3 billion dollars) to expand the e-commerce business of its chain of stores, such as Zara and Bershka, as well as expand the spaces of stores, in a step to increase its competitiveness in the markets, after the coronavirus pandemic severely affected the retail clothing sector.

The Spanish company aims that its online sales will represent 25% of total sales by 2022, after the growth in electronic sales contributed to offsetting the company’s 44% decline in sales in the first quarter.

The company postponed dividends, especially after it made losses for the first time since it was listed on the stock exchange two decades ago.

The company’s chairman, Pablo Isla, said in an interview with analysts that his company was confident of its business model and long-term vision.

He added that the two-month closure of the economy led to the closure of 90% of the company's stores, and the company is currently thinking about how to outpace its competitors and gain a greater market share after reopening the economy again.