SPAIN: Adolfo Dominguez closes 59 stores on EUR3.5m loss
- Nine-month loss reported
- Closes 59 underperforming stores, opens 53 new outlets
- Sharp consumer downturn in Spain
Adolfo Dominguez has posted a EUR3.5m (US$5m) loss for the first nine months of its fiscal year and closed 59 stores in a scramble to restructure its business in Spain's deep recession.
The loss compares to a EUR.2.68m profit in the same 2008 period.
The Spanish retailer's EBITDA fell 40% to EUR9.61m while its cash flow nearly halved to EUR7.6m. Sales fell 10% to EUR118.3m.
Despite efforts to slash costs, the company blamed Spain's sharp consumer downturn for the loss.
"Private consumer indicators and consumer confidence remain negative," the company said in a regulatory statement, adding that business has been tough for the last three quarters.
As sales fell, the company was forced to close the 59 underperforming stores, incurring heavy charges as a result. Meanwhile, a campaign to open 53 new outlets also increased costs.
Overall, the company said it closed 39 self-owned stores and 20 franchises with most of the latter based in Spain and the former abroad. Of the 53 new shops, 39 are self-owned and 22 franchised.
The majority are located in Spain and 17 of them were opened as corners in largest department store chain El Corte Ingles, which has weathered the recession better than other retailers.
Adolfo Dominguez, which has led a major international expansion to take on much larger rivals such as Inditex and Mango, finished the period with 597 shops.
The firm will continue to analyse its stores' performance, particularly those with rental contracts due to expire, before it decides their renewal or closure.
Adolfo Dominguez's woes comes as Spain's retail sector suffers the country's worst economic crisis in decades.
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