Covid Adds To El Corte Ingles Woes

June 6, 2021June 6, 2021 Madrid Metropolitan Business, spain economy, spain news

Spain’s largest department store chain, El Corte Ingles reported record losses of €2.9bn for the trading period from March 2020 to February 2021.

The figures for the same period in 2019 was a profit of €310m.

The family owned company, which dates back to its founding in Madrid in 1940 has over 90 department stores throughout Spain and is one of the countries largest companies and employer.

The company´s chairperson, Marta Álvarez, blamed the losses on the Covid-19 pandemic and restrictions on trade, saying the year was ‘shaped primarily by the closure of much of its business during the initial lockdown and successive restrictions at the regional level, compounded by the total absence of domestic and international tourism’.

The company acknowledged that changing customer habits as well as losing market share to online platforms were also a factor.

The Spanish retail flagship provisioned €2.5bn for the deterioration of inventories and tax credits, as well as for the an accelerated digital implementation strategy to compete against the likes of Amazon.

‘Most of the provisions derive from the restatement of assets as a result of the group’s transformation to a more digital business model,’ said the company statement.

The company has recently announced a workforce reduction plan which will see a cut of some 3,300 – about 4% of the workforce-, which is being carried out through a voluntary redundancy scheme.

The cuts were proposed in February with an offer of 33 days’ salary per year worked as well as a seniority linked bonus.

Despite all this, El Corte Inglés managed to maintain a good balance sheet with some €3.5bn in liquidity and hopes for sales to rebound as the economy recovers in 2021 and 2022.