DIA lost 480 million euros in sales in the first half of the year, a period in which, according to the group, revenues were affected by a series of extraordinary negative factors.
These factors include collective redundancies in Spain and other measures within the Brazilian structure to improve productivity, very high levels of stock shortages in the group's stores throughout this period, the closure of 663 loss-making stores with a permanent negative contribution, the conversion of 222 franchised stores to company-owned stores with the aim of improving and strengthening the franchise network, a product assortment optimization plan to significantly reduce the number of references in order to eliminate complexity and improve operations, the discontinuation of non-strategic activities to reduce complexity and improve efficiency, and the recognition of provisions, losses or write-offs of accounts receivable, risks and liabilities that had to be provisioned.
During this period, sales reached €3.400 billion, a decrease of 7%. Nevertheless, comparable global sales for July and August already showed a gradual recovery, at a time when the group " is committed to promoting sales recovery through various initiatives. With a solid long-term capital structure, available resources of up to €800 million and the full support of the reference shareholder, the company is fully prepared to face all challenges ," the statement reads.
With the arrival of the new management and the injection of liquidity in June, the group's immediate priority was " to normalize the relationship with suppliers, eliminate stock shortages and fully replenish stores and warehouses, with the aim of providing a complete service to customers and returning to normality as quickly as possible ." The positive effect of this normalization is already visible in July and August, as comparable sales show a significant improvement compared to the historical lows recorded in June (-15,5%). "DIA's new management is fully aware of the challenging situation. The team has the knowledge and experience to get the business up and running again and continue to take the necessary steps to put DIA in a strong position to achieve long-term success. Every day there will be improvements and changes, which will still take some time," notes Karl-Heinz Holland, CEO of the DIA Group.
The group now has a stable cash flow and a solid working capital that enables it to strengthen its financial balance sheet. In this regard, the largest impacts on adjusted EBITDA, which total €88,8 million, relate to inventory liquidation efforts and amortization of accounts receivable.
The refinancing of existing lines of credit, the new lines of credit obtained, the loans with profit sharing, and the future revenues from the planned capital increase eliminate the grounds for dissolution due to losses.
Following the previously announced discontinuation of the cash & carry business, the company has initiated a collective dismissal process for its subsidiary, Grupo El Arbol Supermercados y Distribución, SA, which mainly affects the closure of Max Descuento stores, impacting a maximum of 210 employees.
