Inditex Profit Plunge Raises Concerns for Moroccan Textile Industry

At a press conference on Wednesday, March 10, Inditex’s chairman Pablo Isla announced that the group’s online sales have increased by 77%. However, the profits of 1.1 billion euros achieved in 2021 are down 70% compared to the 2019 fiscal year. The Covid-19 pandemic has hit the Spanish group hard. To the point that the 2.7 billion euros in additional funds released to deal with it between 2020 and 2022, which are intended to finance the acceleration of online sales and the grouping of stores, prove to be insufficient.

The textile sector, like other sectors, has been knocked out by the coronavirus. "We can never say it enough, the health crisis has impacted all companies in the world and each in a different way," says the manager of a textile unit based in Tangier. "Unlike companies working in the health sector, companies in the textile and clothing sector have recorded declines in their turnover, including the Inditex group, with the crisis related to the coronavirus. But we expect, with the evolution of the pandemic, that this will pick up again," he reassures.

Repercussions of the drop in Inditex’s profits in Morocco, where the parent company of eight successful brands (Zara, Zara Home, Lefties, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Uterqüe) has no less than 200 industrial units? Textile professionals are showing a certain serenity. "As much as the information concerns us, as much as it does not worry us. We have to take into account that Morocco is one of the lungs of the Inditex group with which it has excellent relations. If we take into account its strengthened presence, the drop in profits outside of Morocco does not yet have anything to worry the sector," confides another textile professional to TelQuel.

After a momentary halt, "the factories are starting to run again. We are beginning to see the light at the end of the tunnel. We have resumed the usual pace," the textile worker still reassures. Except that it is likely that Inditex’s economic situation will affect the Moroccan textile sector.

In March, the situation is far from rosy for the Spanish giant, whose sales have fallen by 4% the first week worldwide. However, Inditex will not close its factories and stores in Morocco. "(…) I believe that when the health situation improves even more, we will move towards a faster pace and that the Moroccan textile and clothing sector will respond quickly to the increase in demand, because we are used to this type of order," reassures the previously quoted source.