Blog: Dean BestSpain's retail bellwether highlights crisis

Dean Best | 28 August 2012

El Corte Ingles, one of Europe's largest retailers and a leading name in Spain's consumer goods sector, saw its profits slump in 2011, proving just how tough trading has become in the country.

The company, which operates department stores, supermarkets and hypermarkets in Spain, yesterday (27 August) reported a 34% fall in earnings.

Sales fell almost 4%, although El Corte Ingles said sales across Spain's retail sector dropped more than 5% and it insisted it had "maintained" market share.

However, the drop in profits highlights how tough it is to operate in Spain, a country in the grips of a double-dip recession.

El Corte Ingles said consumers were looking to buy cheaper products and it had seen a shift to increased promotions. Earlier this summer, it announced a major promotion of its own, with price cuts on thousands of food products.

Officials figures issued in Spain today confirmed its GDP fell 1.3% in the second quarter year-on-year. Consumer spending dropped 1%, data from the Instituto Nacional de Estadistca showed.

Some food manufacturers have already revealed the effect Spain is having on their business. Last month, Danone confirmed its margins had dropped in the first half of the year. It cited challenging conditions in southern Europe, not least in Spain, and the company plans to lower prices in a bid to bolster sales.

Danone CFO Pierre-Andre Terisse cautioned Danone did not see the trading environment improving in Spain this year. "I don't expect things to improve in Spain and southern Europe, going forward. We need to be agile and make changes to our portfolio," he said last month.

And some continue to agree with him. "We’re not through the downturn and it will turn worse in the next quarters," Christian Schulz, an economist at Berenberg Bank, told Bloomberg today.


BLOG

Nature's Path quits US organic trade body in "protest"

The Organic Trade Association, which represents the organic industry in the US, has seen a high-profile member quit the organisation, taking a swipe at the body's stance on policy issues....

BLOG

Early skirmishes in the Ketchup War

In the 1970s a squabble between the UK and Iceland over fishing rights in the North Atlantic earned the somewhat hyperbolic name of the Cod War....

BLOG

Brexit could be worse for dairy than Russia ban, EU and UK producers warn

Russia's embargo on a swathe of foodstuffs from the EU in 2014 - a ban that lasts to this day - hammered the bloc's dairy industry. But producers on both sides of the English Channel have warned the i...

BLOG

Plenty of hot air as UK politicians grill Asda, Sainsbury's over merger

UK Parliamentary select committees at their best are meant to bring light rather than generate heat but this wasn't a select committee at its best....



Forgot your password?