Pandemic causes historic €3bn losses for El Corte Inglés
The company increases its debt by €560m, which now stands at €3.8bn+
BarcelonaThe covid-19 pandemic has caused historic losses for department store chain El Corte Inglés. The company closed its last fiscal year, which runs from March 2020 to February 2021, with a net loss of €2.9bn. In the previous year, ending in February 2020, just when the pandemic broke out in Spain, it made a profit of €310m.
The impact of the pandemic has a double effect on the company the company presided over by Marta Álvarez. On the one hand, due to closures forced by restrictions on trade as a result of covid-19. On the other hand, the company has had to update and speed to digitisation and e-commerce due to restrictions and changing customers habits. The company provisioned €2.5bn for the deterioration of inventories and tax credits, but at the same time had to accelerate its digital strategy with an update of assets for the transformation to a model with more presence of electronic sales, which took a large part of provisions.
Despite all this, El Corte Inglés managed to maintain a good liquidity position, with €3.5bn. But the group's debt grew by €560m euros and reached €3.8m.
Adjustment of the workforce
The situation caused by the pandemic and the acceleration of the new business model also had an impact on the group's workplaces. During the past year, El Corte Inglés has implemented the largest workforce adjustment plan in its history, affecting 3,292 employees affecting 3,292 employees -about 4% of the workforce-, which is being carried out through voluntary redundancies and has not yet been completed.
The cuts were proposed in February and after negotiation with the unions, an offer of 33 days' salary per year worked, with a maximum of 24 months for leaving employees was made. In addition, they would receive a bonus linked to their seniority.
Despite the losses of the previous financial year, the group has advanced that in the first quarter of the current fiscal year (from March to May) sales in stores are meeting expectations with levels close to those of 2019.