Financial situation of the Hypermarkets in Spain

During 2010, the activity of the retail sector was affected by the economic situation. The increasing unemployment plus the less confidence of the consumers conduced to a reduction of the household’s consumption. In addition, the companies were forced to reduce their prices with aim to gain competitiveness and increase sales.

In Spain are around 440 hypermarkets. Carrefour and Eroski have the 63% of the total hypermarkets.

It is important to point out Only 7 hypermarkets control more than the 70% food sales in whole Spain: Alcampo, Carrefour, Mercadona, El Corte Inglés, Eroski y Dia.

Carrefour and Eroski where the two companies that opened more stores during the last 4 years. Since 2008, the sector faced a

Carrefour is the leader. It came to Spain on 1973 (Barcelona) with the Pyrca Supermarkets. Today it has the 44% of the total hypermarkets on Europe. Since 2000 it has opened 49 more stores (that represents a grown of 42,2%). In 2010, Carrefour in Spin registered sales of 12.679 millions of Euros, that represents the 42% of the total European sells and just the 14% the worldwide sell.

The financial crisis had affected the financial behavior of the whole sector. For example, the sales fell 3.3% in 2010 as the result of a decline in purchasing frequency among customers and a deflationary trend that negatively affected hypermarket grocery sales. So, the impact on profitability from the downturn in sales and the decline in profit margins as a result of commercial investment, particularly in Spain, was partially offset by disciplined management of general corporate expenses, especially in Spain and Poland. Operational investment in Europe totaled 452 million Euros, representing 1.8% of sales.

Eroski situation is similar. At end of 2010, Eroski presented an operational result (EBIT) of 100.000 million Euros, a 17% higher than in 2009. This could be explained because the “extraordinary” incomes increase 18%, besides the reduction of the cost (goods 2,5% and administrative 1,5%), despite the decreasing of their sales (3%). Nevertheless the net profit still negative (-64,6millions), although is better than the one registered in 2009.

The financial debt (long and short term) had an important decrease (454 million Euros). For this reason the liabilities were reduce 8% (5,2 billions Euros). The equity was about 1 billion Euros and so, the assets were 6,2 billion Euros.

At the contrary, Mercadona increased their sales from 14,4 millions Euros to 15,2 millions Euros (6%), that permitted an operational result (EBIT) of 560.000 Euros and a positive net profit almost 400 million Euros, result quite higher than the presented in 2009. Their liabilities were around 2,8 billions Euros, in which is important to point out an increase of 70% of others liabilities in non-current account. Both, the short and the long term debt were reduce (8% an 3% respectively). The equity increased by a 20% (2,2 billion Euros); the assets were of 5 billion Euros and 11% higher than 2009.  In this case, the company had an aggressive sales strategy, improving their own brands, specially on beauty, & clean products.

Sources:

http://www.carrefour.es/grupo-carrefour/carrefour-en-espanya/

http://consultoraempresarialbestrongretail.blogspot.com/2011/08/hipermercados-2010-el-fin-de-una-era.html#!/2011/08/hipermercados-2010-el-fin-de-una-era.html

www.eroski.com

Comments Off on Financial situation of the Hypermarkets in Spain / 02 Dec 2011 por Diana Patricia Sanchez Barajas
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