Zara Owner’s Lean Business Model Helps It Cope With Pandemic

(Bloomberg) — 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.

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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.

The world’s largest clothing chain operator has shown steady improvement after suffering its only loss on record in the first quarter. Chairman Pablo Isla is motoring on with a plan to invest about $3 billion in e-commerce, renovations and new stores over the coming three years to better position Inditex when the pandemic ends.

Inditex has seen a “turning point” during the second

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