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Spain's DIA Issues Profit Warning, Announces Board Changes

By Steve Wynne-Jones
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Spain's DIA Issues Profit Warning, Announces Board Changes

Spanish supermarket chain DIA has issued its third profit warning in 12 months and suspended 2019 dividend payments, as it struggles with falling sales.

Yesterday, shares in the budget retailer posted one of their worst trading days since DIA's stock market listing in 2011.

On Monday, the company also named an executive from main shareholder LetterOne as provisional chairman until a replacement is found for incumbent Ana María Llopis, who said in April that she would step down.

More than 18% of DIA's share capital was held in short positions at the end of September, according to Spanish market watchdog CNMV, and volatility has continued amid speculation that LetterOne could stage a full takeover.

The investment vehicle owned by Russian tycoon Mikhail Fridman disclosed last month that it had built up a 29% stake, taking it within a whisker of the 30% threshold at which Spanish law dictates an investor must launch a takeover.


Annual Expectations

DIA, which appointed a new chief executive in August, said in a statement on Monday that it expected to book 2019 earnings before interest, tax, depreciation and amortisation (EBITDA) of €350 million to €400 million.

It also blamed an increase in operating expenses for its reduced earnings outlook, which compare with a forecast of €476.69 million drawn from Refinitiv SmartEstimates.

DIA gained market share during Spain's economic crisis, as it drew bargain-hungry customers, but it has struggled to find the right strategy since the Spanish economy returned to growth.

The group's sales fell to €3.8 billion in the January-June period – down from €4.23 billion in the first half of 2017, according to its latest sales figures.


Monday's plunge took its shares to the bottom of Spain's blue-chip index.

Chief executive Antonio Coto is due to present a strategic plan by the end of the year.

DIA named LetterOne managing partner Stephan DuCharme as vice-president of the board of administration and said that he would also provisionally take over as chairman.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.


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