Fashion brand Zara posts first-ever loss in India in FY21
Zara’s joint venture partner with Tata, Inditex Trent, which runs 21 stores in India saw its revenue decline to Rs 1,126 crore in FY21
- Zara posted a net loss of Rs 41 crore in FY21 against profit of Rs 104 crore in previous year
- Inditex Trent, Zara’s JV partner in India with Tata, runs 21 stores across the country
- Sales dipped 28% due to Covid-related lockdown and restrictions
Inditex, the Spanish owner of fashion brand Zara posted its first-ever loss in India as sales dipped by 28% due to Covid lockdowns and related staggered reopening during the financial year 2021 (FY21). The fashion house consistently posted profits in India since entering the country in 2010.
Zara’s joint venture partner with Tata, Inditex Trent, which runs 21 stores in India saw its revenue decline to Rs 1,126 crore in FY21. The company posted a net loss of Rs 41 crore as per Trent’s annual report released Thursday. It posted a profit of Rs 104 crore in the previous year. It is one of the most profitable apparel retailers in the country.
Trent’s annual report said FY21 started with significant uncertainty due to the pandemic. It added that operating profit was hit by a drop in sales and restaurants profits due to Covid-related lockdowns and trade restrictions.
According to an Economic Times report, Trent has yet another association with Inditex group to operate Massimo Dutti stores in India. It saw revenues drop by 50% 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.
