The coronavirus has had a strong impact on the accounts of El Corte Inglés. The shopping center giant announced this Friday that it has lost 2,945 million euros in 2020, a historical red number, since it has had to dedicate 2,500 million to provisions to “cover impairments of fixed assets, inventories and tax credits. The company has explained that “most of these provisions derive from an update of assets as a result of the transformation towards a more digital business model”, that is, the shopping centers that were previously the jewel in the crown of the distribution company are now be a drag in the face of the closure and mobility problems caused by the pandemic and changes in consumer buying habits.
El Corte Inglés reaches an agreement with the unions for the departure of 3,292 employees
The group’s turnover fell by 31.6% compared to the previous year, to 10,432 million euros. “This result is mainly due to the cessation of a large part of its activity during the confinement and the subsequent closures that occurred in the autonomous communities, as well as the total absence of tourism, both national and international,” the company argues in a statement. Operating losses, excluding provisions, amount to 445 million euros while debt has increased by 560 million euros, reaching 3,811 million.
To try to give value to shopping centers, El Corte Inglés has launched a project “to add value to these spaces by transforming it into outlets, logistics centers, dark stores or make them profitable through renting to third parties “.
By areas, the retail business, which has decreased by 19% compared to the previous year, “in line with the lower income derived from shopping tourism,” according to the company. The company highlights that the online business has had an increase of 132% compared to the previous year, representing 17.3% of the total volume of the retail business, with a turnover of 2,053 million. The shopping center giant assures that in the first quarter of fiscal year 2021 “retail sales are meeting expectations, reaching levels close to those of 2019, despite the persistent effects of the pandemic.”
While in the case of Viajes El Corte Inglés, the impact of the lack of mobility and the absence of tourists has meant that sales have fallen by 89%. El Corte Inglés Seguros kept its volume practically the same as sales with a turnover of 211 million compared to 216 million the previous year.
Last April, El Corte Inglés concluded its plan to reorganize the workforce, which will mean the dismissal of 3,292 employees in Spain, meeting the objectives of voluntary redundancies. The company is immersed in a process of alliances for business diversification that have led to an agreement with EDP to sell solar panels, the launch of a logistics company for third parties, the creation of the services subsidiary Sicor, to enter the security, maintenance and cleaning businesses – the company bought the private security company Mega2 from a former director – and the framework agreement for the development of new commercial initiatives that closed a month ago with the Masmovil Group,