Spain-based DIA has announced FY2016 results saying that excluding the effects of currency moves, gross sales under banner rose 10.2% to €11.63 bn. Including the effects of currency, gross sales were flat at €10.55 bn. The retailer said it had enjoyed positive like-for-like sales in all its operating markets. This was particularly encouraging given the challenges it has faced in Portugal and given that Spain, Argentina and Brazil had seen food volumes decline during the year.
By reporting market, for the full year, DIA said:
Iberia: Gross sales under banner reached €6.81 bn, with gross sales under banners rising by 1.1% and like-for-like sales up by 1.0%;
Emerging markets: Gross sales under banner fell to €3.74 bn, while in local currency terms they rose 26.3%. Comparable sales growth was 19.1% in 2016 (excluding a +0.3% calendar effect). By country, DIA noted that like-for-like sales growth had slowed in Argentina and Brazil in Q4 in line with inflation. In China it said comparable sales growth reached 3.4% in the year.
Five factors driving performance
Looking at the company as a whole, five key elements in DIA’s strategy stand out as driving its growth in 2016 and should leave it in a good position for 2017:
1. Investment in stores in Spain: DIA has been investing heavily in its stores and noted that there are nearly 2,000 fresh counters in its 1,000 stores in Spain. Also, out of stocks have fallen considerably, improving the customer experience in its home market.
2. Winning with franchisees: Franchised stores accounted for 62% of the retailer’s store base at the end of 2016. 272 more stores were franchised during the year. DIA said that franchisees were becoming more engaged with it and were more satisfied by the offer. Given the range of options for franchisees in Spain at the moment, these scores will provide a foundation for growth in the medium term.
3. Maximising the private label opportunity: through its acquisition of Schlecker, establishment of its Clarel health and beauty banner and continuous development of its lines, private label is a growing factor for DIA in differentiating its offer from rivals. It noted that sales of its premium Delicious brand had grown by more than 40%, while its newly launched Vital brand had grown sales by 7%.
4. DIA Club loyalty programme: with more than 19.5m active members, DIA Club is a mainstay of the retailer’s offer. Underlining the success of its stores and the programme, DIA said 5.6m new shoppers had become members in 2016. The success of the programme in driving loyalty was highlighted by 91% of sales in Argentina occurring in conjunction with a loyalty card. The figure was 86% in China.
5. Growing online presence: although online sales under index in Spain versus some countries in Western Europe, retailers have been increasing their investment as Amazon has grown. DIA has been at the forefront of this investment, adding products and expanding its coverage in Spain. The investment has paid off, with sales three times higher in Q4 2016 versus the same timeframe in 2015.