Spain: DIA's comeback with soaring sales and profit

Updated: Nov 13, 2020

Discount Retail Chain DIA (owned by LetterOne) published its financial results for the third quarter and the first nine months of 2020 on Wednesday, which reflect a growth in net sales of 2.2% to 5,184.5 million euros (US$6,128 mio) and a reduction in losses of 51.3% to place them at 245.9 million euros (US$291 mio).  In a context marked by the health crisis derived from Covid-19, the supermarket chain has indicated that its result has been affected by the adverse monetary effect of currencies (90.1 million euro during the period), mainly due to depreciation of the Brazilian real and that its net sales increased despite the decrease in tourism in some areas of Spain and Portugal as a result of the restrictions derived from the pandemic, the 7.6% reduction in the number of stores and the negative monetary impact of the Brazilian real and the Argentine peso. The bulk of sales comes from Spain. Between January and September, net sales in our country increased 7.6%, to 3,365.6 million euros (US$4,000 mio), despite having 8.5% fewer stores and negative seasonal effects. Globally, between January and September, the group's gross operating profit (Ebitda) stood at 258 million euros (US$305 mio), 171.1% more than a year ago, due to lower restructuring costs, while Adjusted Ebitda was positive at 91.2 million euros (US$108 mio), compared to the red of 39.7 million euros (US$47 mio) a year earlier. For its part, the net financial debt stood at 1,250 million (excluding the 600.2 million corresponding to the application of IFRS16), which implies a decrease of 72.1 million (US$85 mio) compared to December 2019. Stephan DuCharme, CEO of DIA, notes that the company "has posted a good quarter in terms of sales, as the ongoing transformation continues to advance and improves customer perception and experience in our establishments with more fresh produce, retail stores better managed and an attractive range of private label products. "He adds that "apart from a commercial value proposition in continuous evolution, the quarter has represented a positive turning point in DIA's relationship with its franchisees in Spain and Portugal based on the deployment of a new model that allows greater alignment, stabilizes the exit of franchisees and introduces an improved culture of engagement with our key partners." The quarter has represented a positive turning point in DIA's relationship with its franchisees in Spain and Portugal based on the deployment of a new model.

DIA's BET ON ONLINE DuCharme explained that the group is closely monitoring the impact of the new confinement measures by Covid-19 and the new consumer-customer habits, which include increased consumption at home and the improvement of its commercial offer electronic and express shipping service . "In this sense, we are fulfilling DIA's purpose of being closer to our customers and communities, and we work harder every day to achieve this through our proximity stores," says DuCharme. The company, which has a network of 6,207 stores, closed 76 DIA stores in Spain (39 franchises and 37 of its own) and a La Plaza store. Additionally, 120 Clarel stores were closed in Spain.

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