Spain's Eroski Posts Strongest Operating Profit In Its History
Eroski has said that the continued rollout of its 'Contigo' store format has helped the Spain-based retailer achieve the best operating profit in its history.
Eroski posted an operating profit of €193.8 million in the year to 31 January, a 18% increase on the previous year, and the ninth consecutive year in which profits have risen at the business.
The group saw its net sales for the year down 2.4% to €5.27 billion, which it said was mainly due to the reduction in selling space at its hypermarkets.
It noted that in regions where the majority of stores have been converted to the Contigo format, including the Basque Country, Navarre and Galicia, it posted a 1.92% increase in sales.
The group has converted 845 stores to the new operating model, which places increased focus on fresh and local produce; accounting for 80% of its total store count.
'As a result of the good performance of this model, Eroski has reinforced its leadership in the North-Central and North-West areas, where it has focused the transformation of the network so far,' the group said.
As well as transforming stores to a new operating model, Eroski said that a number of products aimed at improving efficiency and productivity also helped it post a solid performance for the year.
Eroski opened 74 new stores in the financial year, of which 61 were supermarkets.
Eroski said that it reduced its financial debt by a further €263 million last year, which means that the group has reduced its debt by a total of €1.9 billion since 2010.
Last summer, the business reached a refinancing agreement with banks on what it described as 'advantageous' terms, while the implementation of the IFRS16 guidelines has also had a positive influence on its operating performance.
The parent cooperative of the Eroski banner, Eroski S.Coop, posted sales of €1.77 billion for the financial year, as well as a profit of €72.3 million.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.