El Arbol confident of bright new future
disposal of nearly 200 stores by the end of March, and is confident
that its newly streamlined business will return to the black by
2004.
El Arbol, the Spanish supermarket group sold recently by Netherlands-based company Laurus, is forecasting operating profits of around €5.2 million for 2003, a major improvement on the €800,000 posted in 2002.
Sales for the year are likely to reach €681 million this year from 427 shops - some 193 fewer than in 2002 as the company continues to restructure its operations. While total revenues will clearly fall as a result of the store disposals, the company said it was confident of improving sales on a like-for-like basis.
The company's 2002 results were impacted by a one-off charge of €27 million relating to the store closure and restructuring programme, which is expected to be completed by the late summer.
According to a report from Europa Press, talks are at an advanced stage with a number of companies over the sale of various El Arbol outlets, and the disposals are expected to be completed by mid-March. The Dia chain, a subsidiary of Carrefour, is thought to be the leading contender to acquire most of the stores, but the company would not confirm this to Europa Press.
What the company did say, however, was that talks were underway with three or four companies, all of which were Spanish rather than foreign operators, which meant that no one company would be able to acquire the entire block of stores on sale.
The new owners of El Arbol, the venture capital group CVC Capital Partners, have already freed up €18 million for investment this year, primarily in improving look and product range of the company's stores. The aim is to push the company back into the black at the net profit level from 2004, and to become the market leader in all the regions of Spain where the company operates a large number of stores.
Some €8 million will be spent on store refits, while a further €4 million will go on promotions designed to highlight what the company calls "the new flavour of El Arbol". Some €3 million will be spent on retraining the company's staff.
Inside the stores themselves, there will be greater emphasis placed on fresh products, as well as on well-known Spanish brands rather than on own labels. That said, the company's own Super brand will not disappear altogether, but will account for around 15-20 per cent of total revenues by 2004, the company said.
