DIA Q3 sales growth limited by deflationary environment
DIA continues to grow share in majority of markets
By geography, DIA said that it saw a contraction in sales in Iberia – of 4.6% at a gross sales under banner level and by 7.1% in like-for-like terms – affected by a ‘negative calendar effect’ and ‘very adverse’ business conditions. The retailer said that the highly deflationary environment in food in general – although DIA said there appeared to be a let up in September – was accentuated by a mild summer, which ‘did not support trading of some seasonal products’. DIA said that Spain performed better than its operations in Portugal, with it continuing to gain share in its home market due to ‘constantly reflecting in our prices the significant inroads made in our buying conditions’.
In the emerging markets of Argentina, Brazil - see our recent store visit to one of its new stores in Brazil here - and Shanghai, DIA said it generated growth of 32.9% in local currency terms, with like-for-like sales rising by 22.5%. The retailer spotlighted the positive developments of entering a new region in Brazil – Bahia in October 2014 – and that it continued to gain market share in all three markets.
Keeping costs low aiding profitable growth
Despite the difficult economic backdrop in the key market of Spain and sustained expansion in emerging markets leading DIA to invest in its operations, the retailer said that adjusted EBITDA rose by 6% in local currency terms to €154.2 million in the third quarter. To maintain this level of profitability, DIA said that it ‘managed to rapidly adapt its cost structure to the new scenario. This, coupled with the growing contribution of franchised stores in all markets, allowed it to achieve a set of results that can be considered outstanding given the business context’.
Source: igd.com