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Inditex’s Bershka, Pull & Bear and Stradivarius Exit China

Three of Inditex’s global fashion brands are officially withdrawing from one of the world’s largest retail markets. Bershka, Pull & Bear and Stradivarius—all sister banners of fast-fashion giant Zara—are exiting China with the closure of the brands’ stores on Tmall.

Customer service for the Tmall flagships will remain available until Aug. 31, according to notices on each site.

Inditex did not immediately respond to Sourcing Journal’s request for comment.

All three brands began an exodus from the country at the start of the Covid-19 pandemic. As of January 2020, Pull & Bear had 65 stores, Bershka operated 62 stores and Stradivarius ran 35 locations in the country. By January 2021, that number had already dwindled to six Pull & Bear stores, seven Bershka locations and zero Stradivarius stores. All the remaining Pull & Bear and Bershka stores have since been shuttered.

Inditex’s other brands still have a major presence in Mainland China, with Zara operating 133 stores in the market as of Jan. 31. Massimo Dutti and Oysho operated 70 and 61 stores respectively, while Zara Home had 39 locations.

Across all markets, the three brands still have a significant brick-and-mortar reach. Bershka operates 971 stores, Pull & Bear has 864 locations and Stradivarius is home to 915 stores.

The move comes just a few weeks after American Eagle Outfitters closed its Tmall store, fueling speculation that it could be leaving China as well. The retailer posted on its official WeChat account that the brand was going through a “temporary break” in the market.

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Chinese shoppers can still purchase American Eagle and Aerie products on its official website, but it appears that all products ordered will be shipped from the U.S. The company had already shuttered all brick-and-mortar stores in China in June 2019.

For Inditex, the exit represents what would be a small portion of the company’s revenue. According to Inditex’s 2021 Review, global sales for Bershka, Pull & Bear and Stradivarius reached 2.17 billion euros ($2.21 billion), 1.88 billion euros ($1.91 billion) and 1.82 billion euros ($1.85 billion), accounting for 7.8 percent, 6.7 percent and 6.5 percent of overall revenue for the Inditex business, respectively.

Across the board, Inditex is becoming more reliant on the Americas and European regions. While Asia and the rest of the world accounted from 23.2 percent of sales in 2020, that number has since dropped to 19.7 percent.

In the company’s first quarter earnings call in June, Inditex CEO Óscar García Maceiras referred to the Spanish fashion retailer’s performance as “strong across all geographies, with the exception being those markets subject to restrictions,” indicating that the Chinese market had underperformed due to the lockdowns.

For Inditex, 67 stores across all its brands were subject to lockdowns during the 2022 first quarter. As of April 30, four stores remained temporarily closed.

Inditex on the whole had a successful first quarter, with revenue rising 36 percent to reach 6.74 billion euros ($6.86 billion) with net income reaching 760 million euros ($773.4 million), a year-over-year improvement of 80 percent. In the call, Marcos López, capital markets director at Inditex, specifically called out Stradivarius, Pull & Bear and Bershka as “formats that have progressed strongly,” outpacing growth of the Massimo Dutti and Oysho brands.

The closures come shortly after H&M closed its flagship store in Shanghai in late June, which was the fast-fashion retailer’s first physical store in Mainland China when it opened 15 years ago. The company now lists that it operates 362 stores in the market, down from November 2021’s total of 445 stores. One year earlier, H&M Group operated 505 stores in China.

H&M’s downsizing in China comes amid consumer boycotts of the retailer after the company cut its ties with cotton suppliers from the Xinjiang Uyghur Autonomous Region (XUAR) over ongoing reports of forced labor. Additionally, China’s “zero-Covid” strategy of implementing citywide lockdowns that effectively closed many stores has likely played a factor. As of May 31, 15 stores were still closed in China due to Covid-19.

Succeeding in China has not been easy for many Western fashion companies. Popular retailers like Urban Outfitters, Everlane, Asos, New Look and Old Navy all made attempts to enter the country, and all of them ended up exiting after struggling to gain traction.

Forever 21 is the latest major retailer attempting to crack the Chinese market, but this marks the third time the teen fashion seller is trying to make a go there.

“It’s clear within the fast-fashion space there has been somewhat of a shift towards nimble domestic fashion brands, so if anything it is harder now for international fast fashion to compete here than in the past,” Ben Cavender, managing director of China Market Research Group, told Reuters when the publication reported on the Forever 21 news.