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The profit of Mercadona falls in half in 2017 with a record investment of 1.8 billion

NET turnover grew by 6.1%, up to 21,011,500,000 euros

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The profit of Mercadona falls in half in 2017 with a record investment of 1.8 billion

"We were very fat, we had passed and we had to do regime." With this sentence, Juan Roig, owner of Mercadona, has justified fall in profits of supermarket chain, due to accelerated investment, which rose to 1.8 billion euros, 667 of m in opening and reforming of stores. The net profit was 322 million euros, 49% less than in 2016. Last year, Roig already anticipated that result could be reduced by two-thirds due to major investments.

More information
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  • Mercadona, supermarket with most customers and most growing in 2017
  • Mercadona and digital client

The president of Mercadona has argued that companies should not focus exclusively on profit. "Just as a person does not live alone to eat, but cannot live without eating, a company must not live to profit, but it must have m to survive," he said, to justify sacrifice of profits to gain long-term impulse. Given benefits of 685 million last year, he said that y have "sacrificed benefit to be strong."

The analysis of income statement shows that amortizations, part that more clearly reflects impact of investments in result, increase by 46 million euros. It has actually had a greater impact on reduction of gross margin on sales, in a context of strong competition in sector, increase in staff costs, which increase by almost 230 million, and those of or operating costs, which increase by about 300 Millions (partly offset by increase in or operating income).

What was not resented was net turnover (excluding VAT), which grew 6.1% from 2016, up to 21,011,500,000 euros in sales. The number of workers in chain has also grown, until 84,000 to December 31, 2017, compared to 79,000 with which it closed previous year, as explained Roig in annual presentation of results at company's headquarters in Puçol (Valencia).

According to president of Mercadona, during 2017, 157 stores have been updated to what company calls Store 8, which includes improvements in energy efficiency ("although we have been last, we have closed freezers, our bosses are no longer cold"), Aspect ( "We put plastic carts, which no longer give cramps, and no coins") and incorporation of areas like those of frescoes. In this and in openings have spent 481 million, to which we must add 186 invested in incorporating area of frescoes in 25 or establishments. According to Roig, reform program has been successful and stores have an increase of 75 tickets per store a day, a growth of 3.5%.

The construction and improvement of logistic blocks, centers for supply of stores, has been carried 175 million, by 141 invested in digital transformation. Finally, 25 million was invested in preparation of landing in Portugal in 2019. In total, investments amount to 1.8 billion, a record number.

This amount will be cut short this year. The company plans, as Roig announced, to give even more impetus to reform plan and to update 250 establishments fully and incorporate area of frescos in anor 200. In total, it plans to invest 1.5 billion in 2018. It will be first step of an investor plan that Roig has encrypted in 8.5 billion euros between 2018 and 2023 to reform in period 1,627 stores of chain. "And without debt and with own resources," he said.

As for growth of workforce, this has been greater than in recent years, incorporating 5,000 employees, up to 84,000, "all fixed". At a time of great sensitivity to gender gap, he emphasized that his company ruled "meritocracy" and that 67% of workforce are women, 47% in case of management. He stressed that salaries grew by 1.1% last year and that y paid 313 million in premiums for good performance. "98% of workers exceed ir coordinator's interview and benefit from that premium," he said. It has also encrypted in or 54,000 employees of its suppliers, after increasing its templates in 3700 people.

Sale ' online '

The president of Mercadona has confirmed that in second semester of year will begin tests for new online sales platform, which have invested 20 million. The tests will begin in Valencia, " laboratory", where a "hive" has already been installed, a specific store for online sale. The project rules out that online deal is made from stores. "Distributing from stores we lose pasta to Punta Pala", he joked to 101 journalists accredited to listen. and added: "Let's do it right, I'm convinced that we will do very well, to make it wrong already is current Mercadona".

The ideal establishment

Why do y talk about "store 8" in Mercadona? Because "we have not yet reached 10", which would be ideal establishment, explained Roig. And what do you need for 10? "They are asking us to have freshly made food in shops, and even an area to be able to eat in m. Also that we have cold drinks, that we do not have, and that we have WiFi, something that we are debating, "said president of Mercadona.


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