Sales totalled €2,817 million and gross profit €811 million in 2Q despite the sharp negative impact of the pandemic, especially on the travel business.
Retail sales were largely stable throughout the quarter. The 12.9% year-on-year decline was due to the drop in tourist footfall.
During the first half of the year, the company stepped up its online strategy by launching a new app to strengthen its omnichannel positioning. It continued its diversification with the creation of the new specialist security and services businesses, Sicor, and bolstered its corporate social responsibility policies.
The El Corte Inglés Group reported positive EBITDA for the second quarter (June-August 2020) of its financial year thanks to online sales and store reopenings. Consolidated revenue amounted to €2,817 million and gross profit to €811 million.
The impact of the pandemics was particularly felt on tourism-related activities. Viajes El Corte Inglés was the area hit hardest, sustaining a more than 90% plunge in revenue.
Stripping out tourism, retail sales held mostly steady throughout the quarter. Total retail sales were down 12.9% year-on-year at €2,843 million owing to the drop in domestic and international tourist footfall. The 2Q revenue margin widened by 170 basis points from 1Q, to 26.7%.
After a first quarter affected by store closings (except for food and essential services), the Group generated €679 million of cash flow in the June-August period on the back of higher sales and the positive impact of cost savings and purchasing management, along with other complementary management measures and actions.
STRATEGIC POSITIONING
Throughout the crisis caused by the pandemic, the Group has strengthened its financial flexibility. It has managed to boost liquidity and reduce costs, while driving its online business and omnichannel strategy. This allowed it to maintain if not raise market share in specific segments, optimising the physical and digital value proposition. During the months of lockdown, El Corte Inglés was even the leader in online sales of food and household items, the two product categories with the strongest demand during the year. It was also among the e-commerce leaders in fashion, electronics and sporting goods.
The Group stepped up its logistics and same-day order delivery capabilities and promoted other services, such as Click&Car and Click&Collect.
1H 2020 SALES
The Group reported net sales for the first six months of its financial year of €4,489 million and gross profit of €1,285 million. EBITDA was negative, at €131 million, but improved in the second quarter.
Net debt at the end of August stood at €3,266 million, down from €3,945 million at the end of May. The company continued to pursue a strategy of maintaining and improving its liquidity position, ending August 2020 with nearly €2,200 million of cash, enough to ensure the company’s financial stability.
After the end of the first half, El Corte Inglés successfully placed €600 worth of senior bonds. Demand was strong, with the issue more than four times oversubscribed, prompting the company to raise the initial issue amount from €400 to €600 million. This bond issue bolstered the Group’s liquidity position.
El Corte Inglés also began offering a flat rate for digital purchases and a new app that brings together the best of the online and offline worlds, enabling it to extract synergies that benefit from each. Customers have over 300,000 products to choose from and can receive their purchases at home within two hours or the time slot they choose. Home customers now have a personalised offering; they can customise settings according to their preferences and receive individual offers, shop for articles using photos or bar code scans, and pay using their El Corte Inglés card. The app has been downloaded nearly 300,000 since its launch in early October and some 100,000 customers now get a flat rate for their online purchases.
Steps were taken to further diversify the business by setting up Sicor, a new company that provides security services, alarms, cleaning, etc.
Looking ahead to the second half of its financial year, El Corte Inglés is upbeat about the upcoming Christmas season, when a large percentage of annual sales are made. Looking further ahead, the Group will continue with its business diversification policy and its ongoing efforts to drive digitalisation. It also remains fully committed to its corporate social responsibility matters (e.g. zero waste, energy efficiency, equality policies).
