MADRID (Reuters) – Zara owner Inditex forecast healthy sales as soon as lockdowns are lifted, after the coronavirus crisis knocked its net profit to 1.1 billion euros ($1.31 billion) in 2020, a drop of 70% on the previous year.

Inditex said on Wednesday that it hoped that nearly all of its 6,829 shops worldwide would reopen by mid-April, with around 15% still closed due to COVID-19 restrictions as of March 8.

“As soon as the stores reopen, the level of sales becomes very healthy,” Chairman Pablo Isla said on a conference call.

Zara’s website shows a new collection rife with knitwear, bodysuits and baggy shirts for women and casual vests and jeans for men, suited to the continued working-from-home lifestyle.

The spring collection was “strong” and “bright”, Isla said, adding: “It’s full of bright colours, very optimistic.”

Excluding its five significant markets with stores still closed, Germany, Brazil, Greece, Portugal and Britain, Inditex said like-for-like sales in the first week of March grew 2%.

The impact of lockdowns was clear in the fourth quarter when net profit fell 53% to 435 million euros on sales of 6.3 billion euros, a steeper drop than the 26% in the third quarter, as restrictions came back into force across much of Europe.

Strong online sales, up 77% from the previous year, partly cushioned the company’s performance, coupled with tight inventory management which Inditex said had enabled it serve customers from in-store stock.

Nevertheless, total sales for the year were down 28% to 20.4 billion euros, with a 25% drop in the fourth quarter at Inditex, which is the owner of eight brands including Massimo Dutti and Bershka as well as its flagship Zara.

Although the results were worse than expected by analysts polled by Refinitiv, who expected a quarterly net profit of 602 million euros and full-year net profit of 1.3 billion, the Spanish retailer outperformed competitor H&M.

The Swedish clothing company, which is due to report December-January sales next week, posted an 88% profit drop in its results in January.

Inditex shares were down 0.72% at 1036 GMT.

‘FULL OF BRIGHT COLOURS’

Clothing sales at Inditex’s brands, as well as at H&M and Next, began to register a slow recovery by autumn last year from record lows when the COVID-19 pandemic first struck, boosted by online shopping and a quick rebound in China.

But in the United States and Europe, a return to pre-COVID sales has been frustrated by lockdowns extending well into 2021 and slow vaccine rollouts in many countries.

Some 30% of its stores were closed on Jan. 31, when Inditex’s fiscal year ended, and 52% were under restrictions.

Inditex said it had rolled out its radio frequency technology, attached as a chip to the alarm on clothing to keep track of stock, across all its brands this year, keeping inventory down 9% on the year despite rocky sales.

The company returned to its ordinary dividend policy of a 60% payout and bonus dividends to be paid in May and November 2021 after postponing its payment last year.

Inditex has so far closed 751 of the 1,200 stores it plans to shut by the end of the year in favour of flagship locations from which it can serve both online and in-person customers.

Isla said it does not foresee closing a ‘relevant’ number of additional stores once these closures are completed.

($1 = 0.8423 euros)

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