Two Spanish retail giants announce big profits in 2018

Juan Roig, Mercadona owner.
Juan Roig, Mercadona owner. / EFE
  • Mercadona's profit was up 84% to 593 million euros, and Zara's parent company, Inditex, earned 3.4 billion euros, an increase of 2.2%

Two of Spain's best-known high street names, both still largely family owned, announced record profits for 2018 this week.

On Tuesday, Mercadona, the country's largest supermarket chain, said from its headquarters in Valencia, that its sales last year grew six per cent to 24.3 billion euros. For the second year running, it is also Spain's top-selling company in all sectors, having beaten Repsol to the number-one spot last year. The company now had 27 per cent market share among large supermarket chains, three times its nearest rivals.

The president and founder, Juan Roig, said that despite a 1.5 billion-euro investment programme in updating its store format, earning after costs rose 84 per cent to 593 million euros. Two years ago, Mercadona announced record 636 million gains but this dipped in 2017's results as the investment started to kick in. Some 400 shops were updated last year and by 2023 the firm hopes to have all shops with the new look.

With 1,600 supermarkets across the country, Mercadona says it wants to put more money into its online business in the coming years. It also wants to grow the number of its stores offering ready-made meals.

Inditex growth slows

Inditex's Amancio Ortega.

Inditex's Amancio Ortega. / REUTERS

On Wednesday it was the turn of Inditex to announce its results for 2018 from its base in the town of Arteixo near La Coruña, Galicia. The huge multi-national is owner of brands such as Zara, Massimo Dutti, Pull&Bear, Bershka, Stradivarius and Oysho. Unlike Mercadona, much of its sales come from outside Spain, meaning they are affected by more factors.

Last year profits grew 2.2 per cent on 2017 to 3.4 billion euros. Despite being record-breaking figures for the largest clothing group in the world, the rate of sales growth (three per cent) is the lowest in its history and below its previous low of a five per cent growth in 2013 at the height of the world financial crisis. The company sold 26.1 billion euros across all its markets in 2018.

Like Mercadona, the Inditex group says it is turning its attention to online sales to generate future growth. Last year sales online grew 27 per cent to 3.2 billion euros, 14 per cent of its sales. The company also said it had 150 million followers on social media which it hopes to capitalise on more.

After the presentation, the Spanish stock exchange was unimpressed and Inditex shares fell.

The founder and majority owner of Inditex, Amancio Ortega, is to get an increased personal dividend payout of 1.6 billion euros.