a walk into retail financials - aim - european brands ...€¦ · a walk into retail financials ......

A Walk Into Retail Financials

Prepared by

Summary • Mercadona success is absolute: highest revenues, profit, assets and reserves value, cash

for managing operations.

• Operations efficiency is demonstrated by the fastest and highest stock rotation. It has improved the delay to pay suppliers (56 days in 2015), yet not at the level of speed of smaller spanish players such as Consum, El Corte Ingles. It pays however 20 days faster than international players such as Carrefour or Auchan, or competitors such Eroski or Dia.

• Its gross margin is not the highest, only french retailers and Dia have a lower one; its

high level of private labels may partly explains this situation. • The practice of capitalizing most of the profits obtained through the years (i.e. 17%

paid in dividends in 2015 vs Auchan distributing 100%) led to high level of financial reserves, high level of equity. In addition, over 40% of its assets is cash & equivalents. The company has high financial means which it seems to only concentrate on its network development, with very little participation, affiliates number.

• The company doesn’t report having franchises but owns its 1,574 stores. This

explains its highest number of employees when generally compared to competition.

Summary • In terms of revenues, the Spanish discount retailers (Dia, Lidl, Mercadona) and Consum

manage to grow. All others lost revenues and net sales in the last 10 years despite their increased number of stores . The big formats seem to loose at the expense of smaller ones. There may be big variation by banner (i.e. Supercor grows while Hipercor drops) • After Hipercor, Carrefour shows the highest drop if we exclude the companies which

are issued of merge (Beauty by Dia, former Schlecker; Caprabo merged with Eroski – these network were partially divested under other banners).

• Eroski erosion of revenues and sales started in 2011, while Mercadona expanded in 2014 in the north, challenging Eroski regional leadership. Eroski is a complex group of over 600 companies, grocery representing 94% of the revenues in 2015. It has steadily purchased and sold a set of banners and stores. If it acquired Caprabo, it divested stores to El Arbol, to Dia, Hyper/Center to Carrefour; Consum left the group. If it claims its ambition to grow via franchises, it lost over 100 franchises in last 10 years (-17% franchised stores, representing 25% of Eroski network in 2015 vs 32% in 2006). With Caprabo, Eroski has 4 supermarkets banners (Center, City, Merca). Eroski City (minimum 250 m2- 400 m2 on average) developed at the expense of Eroski Center, through franchises. If franchises help growing the network, it slows the revenues increases as the retailer becomes then a wholesaler with lower margin and sales value.

• Consum doubles it sales and outpaces Auchan Super, Hipercor & Supercor, Caprabo. • Lidl grows by 66% and comes at the level of Auchan Hyper (beyond 3 billion

revenues)

Summary • In terms of Profit, there is not necessarily adequation of level of gross margin and Editda.

Despite an increase of gross margin (i.e. Clarel, Eroski), some companies see drop of profit • All manage a positive operational profit (Ebitda) , • Few manage a growth of Ebidta in value: only Mercadona, Lidl, Dia, Consum do, • On top of Mercadona, Lidl, Dia, Consum, looking at operational profit in %, Caprabo

shows an increase of its ratio, a sign of control of expenses in proportion to the drop of its revenues

• Highest profit ratio are found at discounters (Lidl & Dia); Mercadona is at the level of Consum. Carrefour is within the lowest; Auchan nearly double its profit in Hyper vs Super

• Looking at operational expenses, to explain drop of Ebitda • Purchase expenses (drop gross margin) could explain some Ebitda drop for Supercor

and Auchan Super –not for others • Only Eroski see a significant payroll costs increase in % of revenues – other maintain

their ratio • The lower stock turn/higher inventory (so charges) could explain some lower profit

for Eroski, Clarel, El Corte banners (Hipercor and Supercor) • Utilities costs could also explain some part of the drop (theorically – no data provided

systematically in database – analysis of detailed financial statements could possibly explain – no systematic details/no financial standards requested)

• In terms of Final profit (net income), Eroski shows a loss further to its successive revenues losses, acquisitions, debt charges. Most see additional profit drop after Ebidta following financial expenses and taxes, except Carrefour which benefits from affiliates financial revenues.

Summary • Assets: strong difference among players, also between Spanish & International players

• Value-wise, no always direct correlation with the pattern of revenues: i.e. Carrefour is only N°4 on total assets value , N°6 on fixed assets , compared to N°2 in terms of revenues. Its stores divestment and move to franchises may explain significant drop in tangible assets and partially in intangibles. Only the financial assets (via affiliates) grew and balanced somehow the drop of fixed assets value. Unlike most competitors, Carrefour assets rely more on short term than long term.

• Fixed assets: • Mercadona dominates in terms of value, followed by Eroski, Dia and Lidl: they

developped in proportion of their store network/expansion. • Hipercor centers despite a slight drop of assets value remain in the top players in

terms of assets value, a result influenced by its format. • Consum double the value of the assets in 10 years, through expansion of stores. • Auchan roughly maintains its fixed assets value.

• In terms of ratios, • the long term ratio varies around 70% of total assets, with some few exceptions • Beyond Carrefour, Mercadona and Clarel have also higher short term assets

value than other players, compared to long term assets: • Mercadona: it has over 43% in cash vs 41% in reserves; • Clarel has high % in stock (48%)

Summary • Equity and Liabilities

• Mercadona financial power, with high level of reserves (67%) , dominates all. It is mostly a result of both the growth of its revenues as well as low(er) dividends paid; higher transfer of profit to reserves (i.e. dividends: 16% of profit in 2015 vs 100% for Auchan)

• French players have fewer financial means and assets (value-wise). In terms of ratios, they have

more short term liabilities than long terms liabilities or reserves when compared to Spanish players

• Looking at investment (LT debt): the growth of Lidl, Dia and Eroski network can be seen, as well

as Auchan (27% LT debt ratio on total balance sheet value)

• French players have imported their reliance on suppliers invoice to finance activities. It is higher than for other Spanish or German players

TABLE OF CONTENTS

- Looking at profitability

• Commercial margin

• Operating revenue

• Ebitda

• Net income (after tax, dividends paid)

- Operation efficiency

• Stock management: Rotation, Number of days

• Payment to suppliers: Number of days

• Work force : size, pay in relation to stores (TBC)

- Financial structure

• Company resources and investment, structure of debt

• Asset Management

362.134 399.986

2.469.647

3.538.396

985.737 1.009.710

9.291.333

3.355.814 4.038.331

11.305.219

1.850.479

6.218.699

278.610 638.618 1.031.092

1.587.087 1.994.360

964.087

7.464.915

3.136.672

4.767.224

19.077.481

3.078.293

5.490.314

Beauty byDia (Clarel)

Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte

Consum Au-Super Carrefour Au-Hyper Dia Mercadona Lidl Eroski

2006 2015

... ... ... ...

Operating revenues: Net sales + revenues from insurance/banking activities , rents, travel activities, franchises revenues, commercial cooperation… NB: Revenues derived from financial statements may differ in value and % (e.g. Market share) from panels or scan data as the financial statements only cover the sales generated by the owned stores, while panel/scan data include all banners sales , including sales in franchised stores (classified in other revenues in financial statements)

... ... ...

OPERATING REVENUES

Source: Annual Accounts - Amadeus Financial database

In ‘000 €

% decrease ... % increase ...

... ...

* Dia (stores) : 2007 data instead 2006

• Increase of + 6 billions € amont top players; Mercadona gains close to 8 billions • International players loose sales as well as Eroski & El Corte de Ingles via Hypermarkets

* Alcampo: 2014 data instead 2015

... ... ...

* Caprabo also included in Eroski; Beauty by Dia also included in Dia

Evolution -23% 60% -58% -55% 102% -5% -20% -7% +18% 69% 66% -12%

358.587 376.169

2.178.437

3.444.242

984.530 1.001.999

8.443.897

3.189.386 3.698.538

11.286.253

1.842.836

5.945.969

269.907

633.564 971.177 1.482.926

1.989.886

943.487

7.346.328

3.125.054

4.551.735

19.059.157

3.049.195

5.279.290


Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte


2006 2015

... ... ... ...

... ... ...

NET SALES


In ‘000 €

% decrease ... % increase ...

... ...

* Dia: 2007 data instead 2006 * Alcampo: 2014 data instead 2015

... ... ...

Net sales represents 97% of revenues on average, it increases faster than revenues

34,9

32,3

29,8

32,8

27,2

20 19

20,3

24,8 24,5

21,6

26,1

40,1

27

30,7 30,7 31

19,4 19,4 20,1

23,7 24,6

28,6 28,8

0

5

10

15

20

25

30

35

40

45

2006 2015

GROSS (COMMERCIAL) MARGIN IN SPAIN


Ratio: % (Operating Revenues- cost of good sold)/Operating revenues

... ... ... ... ... ...

• Overall increase of margin with the exception of Auchan, El Corte Ingles, Dia


... ... ... ... ... ...

22.826 23.698

83.698

344.388

56.044 31.104

562.444

196.124 222.589

655.069

80.694

439.485

5.233 22.369 40.520

89.224 113.181

26.614

156.213 140.886

332.822

1.137.439

259.076

101.513

2006 2015

... ... ... ...

EBITDA – OPERATIONAL PROFIT – SPAIN (Value)


In Value in ‘000 €

... ... ... ...

• Overall drop of profit except for the (soft) discounters & Consum • Despite its revenues growth, Supercor sees decline of ebitda


... ... ... ...

6,3 5,93

3,39

9,73

5,69

3,08

6,05 5,84 5,51 5,79

4,36

7,07

1,88

3,5 3,93

5,62 5,68

2,76 2,09

4,49

6,98 5,96

8,4

1,85

Beauty ByDia (Clarel)

Supercor -El Corte

Caprabo(Eroski)

Hipercor -El Corte

Consum Au-Super Carrefour Au-Hyper DiaMercadona

Lidl Eroski

2006 2015

EBITDA – OPERATIONAL PROFIT – SPAIN (%)


Ratio: % on Operating Revenues

• Overall drop of profit (1% on average) • (soft) discounters, Consum and Caprabo (supermarkets) increase or maintain • Caprabo lost in value but manages to improve its ratio

* Dia: 2007 data instead 2006

...

... ...


... ... ... ... ... ... ... ... ...

874 1.374 7.525

162.989

15.398 3.502

315.631

91.787 108.088

241.805

19.691

131.722

-3.581

258 7.256 18

39.018

9.437

254.533

54.873

216.975

611.345

104.938

-61.322

Beauty byDia

Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte


2006 2015

... ... ...

NET INCOME - SPAIN


In Value in ‘000 €

• Only Carrefour improves (value) profit from Ebitda thanks to high financial revenues


... ... ... ...

0,2% 0,3% 0,3% 4,6% 1,6% 0,3% 3,4% 2,7% 2,7% 2,6% 1,1% 2,1%

-1,3% 0,04% 0,7% 0,01% 1,95% 0,97% 3,4% 1,7% 4,6% 3,2% 3,4% -1,1% ... ... ... ... ... ... ... ... ... ...

... ... ... ...

...

2015

Mercadona Dia Carrefour

Eroski

Auchan Hyper

Lidl Auchan Super

Revenues 19,077,481 4,767,224 7,464,915 5,490,314 3,136,672 3,078,293 964,087

Ebitda 1,137,439 332,822 156,213 101,513 140,886 259,076 26,614

Ebitda % 5,96% 6,98% 2,09% 1,85% 4,49% 8,4% 2,76%

Depreciationamortisation

- 372,076 -104,575 - 92,156 - 125,535 - 69,313 - 101,002 -18,380

Financial Revenues

44,902 ( financial assets/ investments)

77,791 (affiliates)

202,445 (dividends from affiliates)

145,280 6,345 422 703

Financial Expenses

- -32,899 - 449 - 101,025 -5,115 -17,974 -1,966

Taxation - 198,920 -56,164 - 11,520 - 32,979 -17,330 -35,584 2,466

Non recurrent

- - - -48,576 - - -

Net Income 611,345 216,975 254,533 -61,332 54,873 104,938 9,437

Net Income%

3,2% 4,6% 3,4% -1,1% 1,7% 3,4% 0,97%

In Value in ‘000 € Revenues and Expenses: Profit build up

% /revenues 1,9% 2,2% 1,2% 2,3% 2,2% 3% 1,9%

8

14,32

10,07

17,91

19,6

14,8

9,4

12,64

14,6

24,1

15,2

10,28

5,09

13,91

15,84

8,18

21,23

17,22

12,48

15,04

19,56

29,1

17,99

9,14

0

5

10

15

20

25

30

35


Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte


2006 2015

STOCK TURNOVER (N° of Time) - SPAIN


Ratio: Operating Revenues/stock value end year


.. ...

... ... ... ...


... ... ...

• Most manage to improve their stock rotation

... ... ...

70

38

49

30 26

31

48

39

33

20

30,5

48

120

36 33

64

25 26

36

30

25

17

28,4

56

0

20

40

60

80

100

120

140


Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte

Consum Au-Super Carrefour Au-HyperAlcampo

Dia Mercadona Lidl Eroski

2006 2015

... ... ... ... ... ... ... ...

N°DAYS TO SELL INVENTORY - SPAIN


(Days Inventory Outstanding) : (Stock end year/cost of goods)* 365

... ... ...

• Hipercor, Eroski and Clarel(Dia) struggle to be efficient as their EBITDA shows


...

74

10

90

21

74 78

113 110

91

82 82

101

2 5

70

20

40

54

79

71

76

56

40

84

0

20

40

60

80

100

1202006 2015

DAY PAYABLE OUTSTANDING (N°Days) - SPAIN


(DPO) : (trade payables/cost of goods)* 365

Overall decrease in payment days to suppliers: 50 days on average among the top players (2015)


... ... ... ... ... ... ...

...

... ... ... ...

9,13

7,44 8,55

9,34

12,5

7,88 7,59

9,14 8,55

9,27 9,22

12,54

7,99

13,05

SP-Au-Super SP-Carrefour SP-Au-Hyper SP-Dia SP-Mercadona SP- Lidl SP -Eroski

2006 2015

EMPLOYES COSTS IN % OF REVENUES - SPAIN Number of Employees (average number of persons employed in the year – fixed and not fixed contracts)

Number of Shops – franchises excluded ( see note in Annexes considering weight of franchises to be considered when comparing & analysing)

2006 5,387 37,604 13,604 17,103 54,929 6,063 24,590

5,038 (2008) 17,873 (‘09)

2015 4,275 32,610 9,853 15,318 75,381 8,804 34,964

2006 106 (2008) no data 47 - 1,050 431 1,221

2015 98** no data 53 1,303 1,574 532 1,387

Average costs of employees in € (Costs of employees/Number of employees= average salary)

2006 17,104 18,394 21,099 22,059 25,726 24,053 18,427

19,226 (‘08) 23,734 (‘09)

2015 20,615 19,569 29,507 28,681 31,724 28,959 20,496


** managed in direct

15,43

12,88 13,72 13,27 13,5 12,81 13,56

11,15

14,06

Beauty by Dia (Clarel) Supercor - El CorteIngles

Caprabo (Eroski) Hipercor - El CorteIngles

Consum

2006 2015

24,57

Employee cost in % of revenue - Spain

*Caprabo: stores rebranded Eroski, some divested * Dia: 2007 data instead 2006 * Alcampo: 2014 data instead 2015

Number of Employees

Number of Shops ((as per Financial Statements – see note in Annexes considering weight of franchises to be considered)

2006 3,267 2,987 17,624 22,119 9,493

2015 3,023 3,654 6,325 6,803 11,432

2006 No data 68 (Planet retail) 569 33 (Planet retail) No data

2015 1,164 175 279 43 431

Average costs of employees in € (Costs of employees/Number of employees)

2006 17,109 17,251 19,120 21,222 23,926

2015 22,646

22,394

22,104

26,021

24,523

* Consum: : 2012 data instead 2006

Gross Margin

Revenues Ebitda €

Ebitda %

Net Income €

Net Income %

Stock Turnover

Stock Days

Pay Days

Mercadona 5 1 1 3 1 3 1 1 5

Carrefour 7 2 5 9 2 2 8 6 9

Eroski 3 3 7 10 10 9 9 7 10

Dia 6 4 2 1 2 1 3 2 8

Auchan 8 5 4 6 5 6 4 3 6

Lidl 4 6 3 2 4 4 6 4 4

Consum 1 7 6 4 6 5 2 2 3

Hipercor 2 8 8 5 9 10 10 8 2

Caprabo 2 9 9 7 7 7 5 5 7

Supercor 5 10 10 8 8 8 7 6 1

Performance Rating

,

2% 1% 3% 3% 1% 0% 4% 3% 1% 1% 1%

1% 6%

29%

51%

39% 34%

13%

43%

67%

31%

23%

54%

41%

65%

76% 54%

20%

12%

24%

11%

38%

5%

3%

37%

38%

1%

5%

1%

5%

11%

16%

20% 20%

18%

24%

18%

20% 17%

9%

13%

9%

11%

9%

15%

14%

9% 11%

11%

9%

8%

5% 7%

18%

2%

1%

2%

0% 7%

5%

6% 4%

23%

12%

25%

2% 4%

1%

29%

43%

20% 5%

6%

6%

0% 0% 0% 0% 0% 3% 0%

8%

0% 0% 5% 0%

10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Intangible fixed assets Tangible fixed assets Other fixed assets Stock Debtors Cash & cash equivalent Other current assets


STRUCTURE OF THE COMPANIES ASSETS • Mercadona and Carrefour current assets stronger than fixed : - Carrefour has high stock, - Mercadona sits on cash

Average LT

0% 0%

11%

0,4%

47% 42%

1,8% 2%

16% 13% 15%

42%

78%

71%

21%

13%

78%

86% 63% 70%

21%

5%

1%

17%

4% 27%

0%

1%

4%

4%

47%

48%

5% 8%

18%

10% 8%

10%

11%

10%

6%

2% 2% 3%

2%

6% 11%

1%

3% 1%

11% 1% 1%

0,4%

1%

1,6% 0,6% 0% 2% 1% 1% 1%

8% 0,4% 0,4% 0% 0,4% 0,4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Intangible fixed assets Tangible fixed assets Other fixed assets Stock Debtors Cash & cash equivalent Other current assets


STRUCTURE OF THE COMPANIES ASSETS • Higher proportion of long term assets than top /international retailers • High stock at Clarel (drugstore, former schlecker; Beauty by Dia)

Average LT

34.687

475.333

939.258

1.933.023

373.397

218.022

2.683.928

747.765

1.207.754

1.999.723

792.813

2.443.339

54.850

524.331 568.540

1.694.051

796.440

176.663

1.382.965

720.267

1.549.644

3.575.406

1.621.434

2.766.794

Beauty by Dia Supercor - ElCorte

Caprabo(Eroski)

Hipercor - ElCorte

Consum Auchan-Super Carrefour Auchan-Hyper Dia Mercadona Lidl Eroski

2006 2015

FIXED ASSETS (Intangibles, tangibles, financial)


In value ‘000 €


... ...


...

• Assets change (+/-) influence revenues (+/-)

... ... ...

Assets 58% 10% -39% -12% 113% -19% -48% -4% +28% 79% 105% 13%

Revenues -23% 60% -58% -55% 102% -5% -20% -7% +18% 69% 66% -12%

... ... ... ... ... ...

0,9

0,2

0,68

1,04

0,3

0,52

0,96

0,75

0,54

0,63 0,6 0,58

0,57

0,22

0,54 0,49

0,33

0,6 0,59

0,43

0,71

1,29

0,67

0,93

-0,1

0,1

0,3

0,5

0,7

0,9

1,1

1,3

1,5

2006 2015

CURRENT RATIO: ABILITY TO PAY/FINANCE OPERATIONS


Ratios: Current assets (stock+receivables+cash & equivalent) /current liabilities


... ...


...

• Except Mercadona, current assets cannot cover the current liabilities

... ... ... ... ... ... ... ...

...

10.053 4.184 108.680

8.580 9.964 19.242

1.279.755

374.445

65.676

1.020.495

107.222 208.836

2.741 2.116 10.819 35 9.027 10.371

305.025

23.679

162.549

3.256.993

101.936

240.094

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

3.000.000

3.500.000 2006 2015

CASH AND EQUIVALENTS

Source: Annual Accounts - Amadeus Financial database * Dia: 2007 data instead 2006

... ...


... ... ... ... ... ... ... ... ... ...

Amount of cash at bank and in hand of the company at the end of the year.

In value ‘000 €

• Drop of cash , company ability to manage daily operations

-1.000.000

-

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

6.000.000

7.000.000

8.000.000

2.264.316

368.188 346.760 96.628

662.251 238.307

1.019.177

4.376.342

379.407

550.464

ST -Other liabilities

ST- Creditors(suppliers invoices)

Loans

Others LT liabilities

LT debt

2,511,756

5,568,446

1,515,150

1,033,068

3,579,735

7,660,114

1,666,432

2,666,661

1,044,290

1,986,847

4,248,960

3,420,899

Dia: 2007 data instead 2006 Alcampo: 2014 data instead 2015

What finance the activities? Very different patterns • Mercadona financial power, with high level of reserves, dominates all • French players have generally lower assets value even if high revenues compared to main local players

* Eroski: Caprabo; Dia (El Arbol, Eroski stores)

In value ‘000 €

335,522 273,971

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

4,1 4,9 3,5 7,9 7,1

10,4

0,2 2,6 0,4 0,2

17

9

18,6

6,1

27,4

7

40,7

14,6 22,8

9,3

39,7

6,6

28,5

57,1

7

19

16,1

0

0,5

26,8

0,3

0,1

0,8

6,2

0,6

37,7 0,8

0,2

35 42 15,6

54,8 0,7

1,7

1,8

1,2

1,8

3,5

8,7 2,4

0,4

1,2 0,3

20,5

0,7

1,6

0,2

1,9

0,7

2,2

0,7 1,7

0,3

11

0,1

0 4

6

9,8

6,4

51,5

41,6

41,7

51,8

51,1

47,3

45,5 31,3

53,3

29

31

12

31,9 21,3

15,6 16,1 11,4

22,2 15,7

21,5

4,9 8,7

16,6 12,3

5 9 7,3 9,8 ST -Otherliabilities

ST- Creditors(suppliersinvoices)

Loans

Others LTliabilities

LT debt

Othershareholderfunds

Capital


What finance the activities? Very different patterns • LT debt generally financing merge/acquisition*, stores creation (Lidl) • Mercadona sits on large reserves (and cash in assets): a result of high profit/low dividends paid • Short term liabilities among French players keep dominating liabilities


-20%

0%

20%

40%

60%

80%

100%

120%

10% 8%

24%

40%

0,2% 0,4% 9% 12%

22% 30%

16%

-5%

21%

0%

31%

40%

69%

9%

10%

17%

1%

4%

8% 6% 25%

26%

2%

53%

11%

14%

2%

1%

2%

1%

2%

3%

2%

1% 3%

1%

12%

7%

50%

1%

1% 1%

33% 20%

6% 3%

32% 16%

21%

89%

45% 47%

8% 11% 13% 20%

12% 15% ST -Other liabilities


Loans


LT debt

Other shareholderfunds

Capital

0,1%

0,3%

What finance the activities? Very different patterns


912,507 447,986 2,416,856 1,907,979 685,049 1,314,721 591,120 524,466 114,975 95,485

• Slightly lower dependence on short term liabilities among local and smaller players (43%) • Consum increases shareholder funds: at 47% , 2nd best result after Mercadona • High level of ST other liabilities represent intragroup debt and deferred revenues (Dia, Supercor)

-500.000

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

15.440 -5.268

108.202 1.921 412.179

276.798

1.671.161

179.843

46.226

153.145

ST -Other liabilities


Loans


LT debt

Other shareholderfunds

Capital


What finance the activities? Very different patterns • Despite drop of value, Hipercor financial means higher than other hyper (Auchan/Carrefour)


912,507

447,986

2,416,856

1,907,979

685,049

1,314,721

591,120 524,466

114,975 95,485

ANNEXES

Legal entities

Auchan: two companies were included in the analysis as no

consolidated country report is available

Alcampo S.A. (Auchan Hyp)

Supermercados Sabeco S.A. (Auchan Sup)

Carrefour: National consolidation

Reports can be found for

- Centros Comerciales Carrefour S.A

- Supermercados Champion

- Grup Supeco Maxor SL

Consum

Consum Sociedad Cooperativa

DIA Distribuidora Internacional de Alimentacìon

S.A. (since 2010) – Unconsolidated report

El Corte Inglès

Hipercor SA

Supercor SA

Eroski

Eroski, S.Coop y Sociedades Dependientes

EROSKI SOCIEDAD COOPERATIVA -

Caprabo S.A

Lidl Lidl Supermercados S.A.

Mercadona Mercadona S.A.

Understanding the terms and data as used -P&L OPERATING REVENUES AND EXPENSES • Net sales: sales from main activities, (as per bylaws – so grocery sales here) without VAT • Other Operating Revenues: revenues from « other » retail business (e.g. rent, franchise

rights, insurance, banking, travel, sales of services, gains on the realization of assets, patents…)

• Operating expenses: purchases, rent, inventory costs, marketing, payroll, insurance and funds allocated toward R&D, utilities (electricity...), maintenance and repair, local taxes (e.g. real estate), etc….

• Amortisation and depreciation (loss of value e.g. assets, trade receivables) • Provisions for risks and charges (e.g. legal fees, employees benefits, taxes due…) FINANCIAL • Revenue: from interest (loans), income from shares, exchange gains, gains on financial

asset sales, (re)sale of financial products … • Expenses: interest & banking charges, write off financial assets, exchange loss… NON RECURRING • Revenue: sales of assets/activities • Expenses: assets impairment/write offs, restructuring costs (in case of merger/acquisition or sales)

Understanding the terms and data as used Balance Sheet ASSETS EQUITY AND LIABILITIES

FIXED • Intangible: Goodwill, Software, Intellectual Property Products

(patents, trademarks, copyrights), Business fund (« fond des commerce, Fondo di comercio ie customer lists)

• Tangible: machines, equipment, land, buildings … • Others: investment in properties (not used for main activities,

held to earn rentals or for capital appreciation (or both). IAS 40). Financial investments in companies of groups or others, long term financial investments, pension funds…

EQUITY/SHAREHOLDER FUNDS • Capital • Others: funds for example

• Various reserves, • profit no distributed • State or similar subsidies • Minority interest if any

NON CURRENT LIABILITIES • Long term debt (at financial institutions, credit & loans, bond • Other : Commercial debt, debt with companies of the group;

deferred taxes, pensions loans, provisions for risks & charges: Employees (ie pension , social security etc); Taxes; Repair & Maintenance

CURRENT (Within the year) • Stock • Trade (customer) receivables • Others: receivables from others (taxes, social security), Cash

and Cash equivalent (short terms investment)

CURRENT LIABILITIES • Debt: loans (short term or long term elements to be paid in the

year • Trade payables : suppliers invoices • Other: such as pension, employees costs, taxes, intragroup

debt..

Source: Amadeus & Orbis Financial database: standardisation of accouts across various countries rules and companies practices

Reading Guide Look at both value (€) and ratio (%): evolution might differ ( Ratio is a relationship, performance measure with another value, it allows to compare companies) • Operating Revenues: net sales (products sales)+ revenues generated from other activities

(ie franchises, rents g, bank/insurance activities…) • Net Sales : are they increasing? How is their % in term of operating revenues (= are the

stores or the “additional business” of customer the growing source of revenues)? If franchises help growing the network, it slows the revenues increases as the retailer becomes then a wholesaler with lower margin and net sales value.

• Gross margin: a measure of interface with suppliers. Evolution (ratio) can be explained by several factors (assortment mix, evolution of Private labels, Retail RSP price, Supplier sell price….)

• EBITDA: Operational profit: can be linked with their private labels business, not just their

stores operations depending the operations the financial statements cover. • Are the retailers able to manage their stores/operations ? If not, what are the

expenses which create an issue…can it be or not improved through their collaboration with suppliers?

• Revenues/sales and Ebitda: are growing sales leading to more or less profit and why (costs of sales, efficiency in managing promotions etc..) • Need to balance shopper data (panels) with financials. • Value can increase, ratio decrease ( =profit increases but not in same proportion as

revenues. )

Reading Guide Measures of operating efficiency and expenses affecting EBITDA • Costs of Goods (linked to gross margin, increase or decrease) • Employees costs : Evolution – combine both back office and stores operations (if

integrated retailers). Evolution can be function of stores opening/closing; transfer of activities to franchises (a way of outsourcing costs/expenses) , stores opening or closing, extending opening hours

• Stock turn/DIO: ability to service sales • Ratios: Stock turnover (number times stock sold to achieve revenues; number of

days stock stay in inventory before being sold). • Generally the greater the format, the larger the assortment (including non food

such textiles, electronics..), the more days to sell, the lower rotations • DPO: Days payable outstanding: measure of the average number of days the company

takes to pay its suppliers (a way for retail to finance its operations, manage cash) Expenses affecting overall profit • Amortization & depreciation: accounting writing which can affect – at times artificially –

the EBITDA report. Different models can be used and explain some differences between companies (linear or regressive/degressive amortisation; rules for depreciating assets…)

• Financial expenses (costs of investments/loans, write off of financial assets, exchange loss) and revenues

• Non recurring events (no part of daily business) i.e. assets divestments or purchase

Reading Guide • Assets: the resources the company owns to generate revenues/define the company’s value (in case

of merge, divestment…) • Their value (€) , their evolution, in comparison with others • Their costs (financing, maintenance) • Their structure (e.g. current assets : used/turned in cash in the year)

The yearly difference of tangible assets value (N assets value – (N-1) assets value+ N value of depreciation/amortization) is a good proxy for measuring the yearly investments (Capex: capital expenditures) made by the customer. Depending on the nature of the investment, the value is transfer into tangible and/or intangible assets (i.e. in case of stores purchasing/merge, some of the stores value are accounted in the tangible assets while there might be some goodwill accounted in the intangible assets), For retail, a major source of investments, beyond stores purchase, rely in the transformation of stores under new banner, the renovation/modernization of stores, the growing investments in IT solution (scanning, information system for network/supply chain efficiencies, digitalization…etc.) Impairment: in general, companies consider that there are indications of impairment when adjusted EBITDA (=earnings before depreciation/amortization and impairment, gains/losses on disposal of fixed assets and other non-recurring income and expense) of a mature store (one that has been in operation for more than two years) have been negative for more than two (Carrefour)/three(Auchan) years (rules vary per retailer)

Reading Guide

• Shareholder funds (Equity) & liabilities Shareholders' equity : Total Assets- Total liabilities (net value of a company, or the amount that would be returned to shareholders if all the company's assets were liquidated and all its debts repaid)

High level of shareholder funds reflects company ability to invest and develop, to finance its growth. It also illustrates policy towards profit (level of dividends distribution, past profit retained in company) Long term debt: LT debt generally financing merge/acquisition, stores creation Working Capital= current assets – current liabilities. It is the ability to manage operations, covering expenses. Structurally the retailers have a working capital deficiency – an inability to cover short term expenses without relying on delays in paying suppliers

Shareholders

• In its financial statements, Alcampo declares having 53 hypermarkets and 31 gas stations in 2014 (vs 52 and 31 in 2013). Its website (http://www.alcampo.es/empresa-y-empleo )declares 56 in 2016.

• It declares also providing goods and services through commercial establishments under franchises or similar, without specifying its numbers.

• In Spain, Immochan would manage 30 commercial centers.

Auchan Hypermarkets in Spain

http://www.alcampo.es/empresa-y-empleo







SUPERMERCADOS SABECO SA

50830 VILLANUEVA DE GALLEGO, Spain

• Sales in direct: 62%; • Inner group sales:10,6% • Fuel: 6% . • Franchises and POS in partnership : 12,4% of sales; • Services: Intragroup companies/Associates : 8% of services sold ; rest considered as Commercial cooperation so 6,9% of net sales

SUPERMERCADOS SABECO SA

50830 VILLANUEVA DE GALLEGO, Spain

Points of Sales/Stores 2015 Net Sales € 2015

Managed in direct 98 584,182,012

Managed in Association *

46

Franchises 167

Gas stations 17 67,342,196

Total Stores under banners 328 943,487,232

* In association: participation capital (<50%)

116,706,972

The information on network is not systematically provided. In 2008 however the report declares that Auchan Spain supermarket network covers 106 establishments owned and 122 are ‘associated /under franchise. It would actually means a total of 228 supermarkets against 311 in 2014 (+36%).

4729 Other retail sale of food in

specialised stores

L'HOSPITALET DE LLOBREGATC 1- IN 03/2017 109 475

Other retail sale of food in

specialised stores

L'HOSPITALET DE LLOBREGATC 1

2. SUPERMERCADOS PICABO SL ES 100.00 100.00

IN 03/2017 66 512 47291. GESTION DE HIPERMERCADOS CAPRABO EISA SL ES 100.00 100.00 -

Vari- No of NACE NACEReven

ueation employees Rev. 2 Rev. 2

Source

ident.

Date of

info

Op.

City TypeLevel

of own.(m

EUR)*

The companies underlined and displayed in bold blue are available onAMADEUS

Subsidiary name

Co

unt

ry

Direct

(%)

Total

(%)Status

Current filter:No filter

The GUO of this controlled subsidiary is MONDRAGON CORPORACION COOPERATIVA S. COOP.

Current subsidiaries

CAPRABO SA

08908 L'HOSPITALET DE LLOBREGAT, Spain BvD ID number ESA08115032

Latest account date 31/01/2016

• In 2015, it reports having 279 supermarkets (owned) and 43 under franchises: 322 POS • In 2014: 330 supermarkets (owned) and 37 under franchises: 367 POS • In 2006, its reports having 569 establishments.

The evolution of the stores number is function of a set of merge and divestments to other parties in last 10 years,

Centros Commerciales Carrefour SA Consolidated report for all Spanish activities 13 Subsidiaries

In 2015 • Grup Supeco reports having 98 Points of sales, managed in direct or under franchise: 71 Supermarkets, 16 proximity

stores, 11 « mini hypermarkets », managing over 95,000 Skus • Supermercados Champion reports 50 Supermakets in direct, 10 Mini Hypermarkets, 408 POS under franchise (19

where Carrefour has a participation/Share). A total of 468 POS, of which 87% are franchises • Centros Comerciales Carrefour reports managing directly 139 POS (2015). In 2006, 125 owned, 6 under franchises, • Carrefour Group in its report to Financial Markets authority (p117) states that « most of the Group stores under

banner are operated as franchises ». It states that it has in Spain 718 stores under its banners, integrated and franchises included in 2015. If we take 408 as minimum under franchises: franchise ratio is minimum 57% in 2015.

The supermarkets are said using the banners; Carrefour Market, Carrefour Express, Carrefour Mini and Supeco Supermakets (which are low cost supermarkets)

Centros Commerciales Carrefour SA Consolidated report for all Spanish activities 13 Subsidiaries

In its registration report for the financial market authorities, Carrefour reports p,10 STORES (INCLUDING FRANCHISES AND PARTNERS) Spain 2015 2014 718 582 Hypermarkets 173 174 Supermarkets 126 123 Convenience stores 419 285 In 2006, the financial statements reports for - Centros comerciales: 131 hypermarkets, 125 owned, 6 in franchises - Champion supermarkets and proximity: 51 , combining own and franchises (no specifiation of ratio) against 85 in 2005

(sales to Dia) - Supeco reports 45 POS, against 79 in 2005 (no specifiation on franchises) - A total of 227 POS in 2006 vs 718 in 2015

2006 2015

Centros Comerciales 131 (125+6) 139

Champion 51 468 (60-408 franchises)

Supeco 45 98

Total 227 705

In 2015: 661 stores • 431 stores owned (65%) • 230 franchises (35%) under « Charter » banner

Financial statement states that 36 supermarkets were opened in 2015: 25 franchises, 11 owned (Consum & Consum Basic)

In 2012: 610 stores • 428 stores owned (70%) • 182 franchises (30%) under « Charter » banner

In 2007: 169 stores https://www.consum.es/historia/ • 53 stores • Acquired 116 new supermarkets from Caprabo, Dinosol and Sabeco (Auchan)

https://www.consum.es/historia/

https://www.consum.es/historia/

For Spain, the Dia unconsolidated accounts covers - per their statement - « wholesale or retail sale of food products and any other consumer goods « , including the stores purchased from Eroski (Cecosa, Picabo and Caprabo banners) The consolidated accounts (Dia Global) cover in addition17 « dependent » companies . In Spain and Grocery, El Arbol is reported separately (it stands for 782,895,000 € revenues and 520 stores owned in Spain in 2015) as well as Beauty by Dia (former Schlecker)

• 2016 Presentation to Investors

• 2015 Annual audited accounts • 4,941 stores in 2015, 1,954 of these stores are franchises (39,5%) • 520 stores are El Arbol whose financial data are not included in the

unconsolidated report of Dia Spain. All these strores are owned by the company • 1,164 Clarel stores (owned) • In total for Dia unconsolidated accounts, we estimate 1,303 stores managed by

Dia directly (4,941 – 1954 – 520-1,164).

• 2009 • 2,815 stores in Spain • 886 of these stores were franchises (31,4%)

• Former Schlecker network in Spain, purchased in 2013 by Dia • Reports in 2015 having « on the national territory » (we assume Spain) 1,195 POS

• 1,164 points of sales owned • 31 franchises (2,6%)

• In February 2013, Dia purchased the company. Its presentation to investors

mentioned 1,139 stores, 47,5% being franchised. 27 stores were moved to franchised management

• In Portugal, Clarel appears under the legal entity « Dia Portugal Supermarkets » • It reports 65 Stores on its local website https://www.clarel.pt/lojas/

BEAUTY BY DIA SA.

https://www.clarel.pt/lojas/

EROSKI SOCIEDAD COOPERATIVA Y SOCIEDADES DEPENDIENTES


The food activities would represent 94% of the Group revenues in Spain Group results were then used for reporting


Channel Banner 2015 POS 2006

Grocery Eroski 89 84

Eroski Center 186 481

Eroski City 264 65

Familia 80

Eroski Merca 8

Caprabo 286

Grocery Total 913 630

Travel Eroski Viajes 147 256

Fuel Stations 62 48

Forum Sport 46 41

Health & Beauty IF 200 227

Cash & Carry 19 19

Franchises Unspecified 465 (25%) 572 (32%)

Total 1,852 1,793

Others 40

According to El Corte Ingles 2015 consolidated accounts

• 43 Hypermarkets in 2015 • Represented 9,2% of the group consolidated revenues • Represented 0,01 % of the group consolidated net income (18,000 €)

• 175 stores in 2015 (Supercor, Supercor Express and Superco stop & go with Repsol gas stations)

• Represented 4% of the group consolidated revenues • Represented 0,26 % of the group consolidated net income (18,000 €)

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