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El Corte Ingls, S.A.
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Espacio y Punto, S.A.
Printing:
2012
Annual Report
1
El Corte Ingls Castellana store (Madrid).
2
Contents
Presentation
Financial highlights of the consolidated Group 4
Contribution to national income 5
Board of Directors 7
Chairmans Report 8
Part I Part II
Operating report Legal documentation 74
of El Corte Ingls
and its business group 12 El Corte Ingls consolidated Group 75
3
Financial highlights of the consolidated Group
2012 2011
4
Contribution to national income
Millions of euros %
- Remuneration 1,768.84
Shareholders
1.0%
Company
10.3%
Estate,
Autonomous
Community,
and Local
Councils
13.4%
Employees
75.3%
5
6
Board of Directors
Chairman Directors
Secretary
Board of Directors 7
Chairmans Report
8
Dear shareholders,
On behalf of the Board of Directors of El Corte Ingls, I welcome you to this general
meeting and thank you for your attendance in your dual capacity as shareholders
and employees of the Group. It is our task here to analyse the results of last year, which
spanned the period from 1 March 2012 to 28 February 2013.
To open my presentation, I should point out that the period has been marked by
the general economic recession and by the confluence of factors themselves highly
detrimental to Spanish household consumption. We are now in our fifth consecutive
year of slumping retail sales volumes.
The El Corte Ingls Group has operated in such a complex scenario with the following
results:
Added to these aggregates are the following figures: EBITDA of EUR 734.88 million;
cash flows of EUR 676.64 million; shareholders equity of EUR 7,391.57 million;
contribution to national income of EUR 3,269 million; and investments of EUR 570
million.
By line of business, El Corte Ingls obtained a sales volume of EUR 8,542 million
down 7.3% and a net profit of EUR 264.5 million.
Viajes El Corte Ingls ranked second with sales of EUR 2,238 million down 7.7%
and net profit of EUR 41 million. At 2012 year-end, it had 599 agencies, 506 in Spain
and 93 abroad.
The Supercor and Supercor Exprs convenience stores made sales amounting to
EUR 423 million, representing an increase of 5.1%. Opencors sales reached EUR 244
million after reducing the number of stores as part of the restructuring and resource
streamlining programme for these retail formats.
Sfera increased sales by 9.4% to reach EUR 135 million and net profit of EUR 10 million.
It currently has 88 stores, 20 of which are located abroad, with its operations in Mexico
of particular importance.
Chairmans Report 9
ptica 2000, the chain specialising in vision and hearing health, ended the year with
revenue of EUR 77 million down 2.7% on 2011 and a net profit of EUR 4.6 million.
Bricors sales reached EUR 80 million down 22.6% but net profit improved on 2011.
In 2012 Bricor stores were incorporated into El Corte Ingls and Hipercor stores.
The insurance group increased activity to reach EUR 155 million, which represents
an increase of 7.4%, and net profit of EUR 37 million.
Revenue for Financiera El Corte Ingls amounted to EUR 168.41 million, representing
a net profit of EUR 43 million.
Sustaining the strength of the department store as a retail format. Not only does
El Corte Ingls contribute 58.7% to the Groups consolidated revenue, but it also
remains the leading European department store.
Lastly, the opening of two new El Corte Ingls and Hipercor stores, one in Crdoba
and the other in the Puerto Venecia shopping centre (Zaragoza), as well as a Hipercor
store and El Corte Ingls outlet in Badajoz.
Dear shareholders,
Our Group is facing the new challenges with its time-tested determination and
striving for innovation, renewal and ongoing improvement.
10
And we believe that there are new, highly attractive areas for business, such as the
development of shopping tourism. Coupling the fact that Spain is the second most
visited European country with the significant competitive advantages that we boast,
it is easy to see that there is vast room for growth in shopping tourism. This type of
tourism, which generates significant revenue in other surrounding countries, is still
minor in Spain.
As both shareholders and employees, I would like to thank you for your valuable
contribution. You are all participants in the constant efforts made in managing,
developing and improving resources to make the Company more efficient.
Regardless of the markets behaviour, we strive to continue developing innovative
offerings and cultivate all business areas.
To meet these goals, I look to all of you, to all our professional teams, to the
contribution of our suppliers and to the trust of our customers.
All that remains for me is to ask for your approval of the Management of the Board
and the Financial Statements for 2012-2013.
Many thanks,
Chairmans Report 11
Part I
Operating report
of El Corte Ingls
and its business group
Economic information 13
Corporate social responsibility 41
12
Economic information
Economic analysis 14
Review by business line 18
13
Economic analysis
Revenue
Consolidated revenue totalled EUR 14,552 million in Against this backdrop, the retail industry was affected
2012 (year ended 28 February 2012), down 7.8% on by shrinking household expenditure, the new taxation
2011. The economic situation and general uncertainty framework and, most particularly, by the increase and
had a notable effect on consumer spending, as reclassification of VAT rates. These circumstances led
reflected in the Groups results. to a drop in average purchase spend, a move towards
lower-priced products and a reduction in margins.
14
Revenue 2012: 14,552.45 millions of euros
The Groups consolidated revenue over the last four Revenue / millions of euros
years has been as follows:
Consolidated profit
2009 2010 2011 2012
The contribution to consolidated profit of the Groups
lines of business was as follows:
PROFIT ATTRIBUTABLE TO
NON-CONTROLLING INTERESTS (0.99) 0.20 (*)
Thousands of euros
PROFIT OF
EL CORTE INGLS, S.A. 260,694
Thousands of euros
total 7,348,842
16
The investments in property, plant and equipment were various business lines, and to refurbishment and
as follows: renovation work carried out at existing stores.
Thousands of euros In 2012 two stores were opened with a joint El Corte
Ingls and Hipercor, one in Crdoba and the other
Land and buildings 22.52 located in the Puerto Venecia shopping centre in
Machinery, fixtures and tools 33.17 Zaragoza. A new store was also opened in the El Faro
Furniture 36.42 shopping centre in Badajoz that includes the Hipercor
and El Corte Ingls Outlet formats.
Computer hardware 25.95
Property, plant and equipment in
Refurbishment and renovation work was also begun
the course of construction 341.75
at the Castellana and Goya stores, both in Madrid, and
at the Baha Sur store in Cdiz.
Most of these investments relate to the commitments
acquired and the projects initiated in prior years Mention must also be made of the opening of Bricor
in relation to the opening of new stores of the Groups stores at various El Corte Ingls and Hipercor stores.
Following is a review of the business performance in Gloria Ortiz and Emidio Tucci proprietary perfume
2012 of each of the Groups current business lines and brands in the perfumery area, or the new Black
sales formats. Collection, also by Emidio Tucci, for mens fashion.
El Corte Ingls is an enormous shop window to
El Corte Ingls department stores which new brands are added each year, the common
denominator of which is quality and innovation.
The department store format maintained its strength Noteworthy in this regard is the recent inclusion of
as a business model and remains the most significant labels such as Vince Camuto, Steve Maden, Ugg or Liu
line in the Group taken as a whole with a contribution Jo in the fashion accessory area; Cimento and Stroili
to consolidated revenue of 58.7%. Despite the fall-off in in the jewellery department; or Michael Kors, Karen
consumption and the difficulties facing the business, Millen or Police in the bijoux jewellery section.
revenue for 2012 stood at EUR 8,542 million, with net
profit of EUR 265 million. Also in the area of fashion -in which El Corte Ingls
is perceived as a benchmark due to the considerable
The appeal of the commercial offering, the ability to range of available brands- there were other new
adapt to cater to customers with varying tastes and developments which include the inclusion of the
economic possibilities, and the ongoing improvements Rachel Roy brand exclusively at El Corte Ingls. In the
made to management systems have made it possible to autumn Couchel, a proprietary brand of special-size
overcome the difficulties present in the retail industry clothing for women that produces modern high quality
without losing sight of our commitment to quality, designs at a fair price, was included.
range and guarantees.
Of equal note was the creation, by the designer Juanjo
In Portugal, as in the Spanish market, major Oliva, of a special collection for Elogy, an El Corte
endeavours were undertaken to lower prices combined Ingls exclusive label. Through this initiative the style
with the launch of numerous promotion campaigns of a prestigious fashion designer is made available to
aimed at making the customers purchase decision the public at affordable prices.
easier. The adverse economic situation took its toll
on sales, which led to changes in the management New technologies, e-commerce and the digital
of virtually all areas -from stock control to energy environment continue to capture our interest. The
consumption-, which made it possible to make El Corte Ingls website has been consolidated in order
significant cost adjustments and savings. to offer an improved online purchasing experience
with new tools such as the recently rolled out PayPal
payment method. The last quarter of 2012 also saw
Commercial offering actions with brands such as Spotify for the sale of
cards to subscribe to its music streaming system;
El Corte Ingls is characterised by its wide-ranging and with Filmotech for the start-up of the largest Spanish-
varied commercial offering, which is constantly being language online video club; and with Wuaki.tv for the
updated and adapted to the latest market demands. We distribution of Hollywood films over the internet.
bring in new items in all areas: fashion and accessories,
technology, sport, culture and art, decoration, food, A multichannel platform was launched that includes
catering, customer service, assistance to tourists, etc. both the in-store service and the new digital internet
products on the dedicated website www.bodamas.com
This spirit of renewal includes the introduction of new that offers everything that the bride and groom and
labels and the launch of new products such as the their guests might need for the ceremony, reception,
18
ECONOMIC INFORMATION Review by business line 19
El Corte Ingls department stores
Revenue in 2012: 8,541.74 millions of euros
20
El Corte Ingls department stores | Hipercor hypermarkets
4|3
1|1
4
4|2 1
5|2 8|3
3|2
16 | 10
2 3|1 7|2 2
1|1
In Portugal: 2
Lisbon and
Vila Nova de Gaia - Oporto
Hipercor hypermarkets This drop in prices was also helped by the new
purchasing policy that attempts to go to the origin of
The Hipercor hypermarket chain obtained revenue the product by reducing the number of middlemen.
of EUR 1,867 million, down 11.7% on 2011, with
profit of EUR 4.48 million. This performance was As part of our policy of constant innovation, in some
affected mainly by the economic situation and of our fishmongers sea water has started being used
falling consumption. In any case, the chain has for better preservation and maintenance of the natural
made headway with its plan to optimise internal properties of the products. Also in our fruit and
management which has led to an improved inventory vegetable section, the zero kilometre concept has
system, a reduced inventory and cost savings. This has started to be implemented which promotes the sale of
been accompanied by an organisational change that fresh fruit and vegetables harvested on the day and in
provides for a better distribution of the workload. locations close to the store.
In 2012 three new Hipercor stores were opened: one The textile section has seen changes to the
in Cordoba in May, one in Badajoz in September and arrangement of the garments in order to allow for
one in Zaragoza in October, the latter two are located better presentation and visualisation. These are basic
in the El Faro and Puerto Venecia shopping centres, articles, of good quality and taste, with highly attractive
respectively. Also, significant renovation work was prices.
undertaken at the Campo de las Naciones and Vista
Alegre hypermarkets, both in Madrid. As regards our promotional policy, a new system of
bonuses has been created that allow families to plan
The three stores opened in the year continue the their shopping and obtain major savings.
hypermarket philosophy of offering an extensive
selection of products to set them apart from the
competitors, and have adopted a new store model
with a more modern, easy and enjoyable structure for
consumers. This new approach, which will be adapted
gradually to the rest of the chain, locates all fresh
produce in the centre of the store, which stands out as
a result of its high quality and very competitive prices
and which is reviewed on an ongoing basis, in line with
the new strategy adopted by the Group.
Bricor DIY Over 80% of the articles sold by the chain are from
Spanish suppliers. The good relationship enjoyed with
Bricor, the chain specialising in DIY, interior our suppliers has led to the performance of a series
decoration, gardening and kitchen and bathroom of joint actions, culminating in 2013 in a marketing
projects, achieved revenue of EUR 80 million, down campaign to boost the DIY industry in the Spanish
22.6% on 2011. The decrease mainly arose as a result market.
of the recession in the construction industry which has
affected all the related subsectors. Another of Bricors distinguishing features is its
active environmental policy which is supported by
Brico incurred a loss of EUR 15.5 million, although an numerous campaigns to raise public awareness.
improvement was observed compared with 2011 due One such campaign is the Perform your own energy
to the cost saving and management efficiency policies. efficiency audit which, under the slogan Save money!
The immediate returns obtained with the new urban Sustainability benefits you!, aims to show customers
DIY format developed in 2012 also had an impact how to economise in areas such as lighting, heating
through the opening of Bricor stores inside El Corte and energy.
Ingls and Hipercor establishments.
As a result of its capacity to offer customers the
As a result of this new retail concept, Bricor has best brands and services, Bricor received the Best
eight urban stores in addition to the existing eight Commercial Practices Award based on manufacturer-
superstores in 2011. The new format enables the customer collaboration, awarded by the Hardware
flagships growth strategy to be adapted to the new and DIY Committee of the Spanish Association for
market dynamics, thus satisfying the demands of Commercial Codification (AECOC), which brings
customers seeking household DIY solutions at the together more than 1,000 industrial and distribution
best possible price and without having to travel to the companies.
outskirts of the city.
24
Customer training
CatalONIA: 1 madrid: 7
Valencia Autonomous
Community: 1
In Portugal: 2
(*) Data at 28 February 2013.
Convenience stores
26
Opencor
Revenue in 2012: 244.20 millions of euros
The Opencor chain of convenience stores is subject Convenience Stores: 238 (*)
to legislation establishing opening hours of at least 18
hours a day with an offering ranging from food to gift AndaluSIa: 49 extremadura: 1
and leisure articles, the press, etc. Where permitted Aragn: 3 Galicia: 15
under local legislation, the conversion of Opencor
Asturias: 9 Balearic Islands: 2
stores into Supercor Exprs format resulted in a
decrease in the number of Opencor stores, which Cantabria: 1 Canary Islands: 12
affected revenue and results. In addition, the lower
Castilla-La Mancha: 2 Madrid: 71
level of business activity during the store conversions
also had a detrimental impact on the volume of sales Castilla y Len: 3 navarre: 1
achieved by Supercor Exprs. CatalONIA: 29 Basque Country: 2
In this context, Supercor increased its sales per square Valencia Autonomous RegiOn OF Murcia: 3
Community: 35
metre, improved productivity and continued to save
(*) Data at 28 February 2013.
costs, which enabled it to close the year with revenue of
EUR 423 million, up 5.1% on 2011. Opencor reduced its
level of commercial activity due to the decrease in the
number of establishments, as a result of which revenue
amounted to EUR 244 million, down 27.7% on 2011.
Sfera
In 2012 the Sfera fashion and accessories chain
performed well, achieving revenue of EUR 238.4 million,
up 14.7% on 2011. Its contribution to the Groups
consolidated revenue amounted to EUR 135 million.
These figures confirm the change in strategy embarked
upon in the two previous years which in 2012 helped the
Group obtain net profit of EUR 10 million.
CatalONIA: 3 melilla: 1
In Portugal: 3
(*) Data at 28 February 2013.
28
ptica 2000
Revenue in 2012: 77.26 millions of euros
ptica 2000, the chain of stores specialising in vision ptica 2000 Stores: 109 (*)
and hearing products, achieved revenue of EUR 77 In Spain: 107
million in 2012, a reduction of 2.7% on 2011. ptica
2000 obtained net profit of EUR 4.6 million, down AndaluSIa: 23 extremadura: 1
11.4% on 2011. Aragn: 4 Galicia: 4
In 2012 ptica 2000s actions were mainly focused ASTURIAS: 3 Balearic Islands: 2
on areas such as goods management, the renewal of CANTABRIA: 1 Canary Islands: 3
products, the incorporation of new models and the
Castilla-La Mancha: 3 Madrid: 19
implementation of cutting-edge technologies at new
points of sale. Progress was made in the management Castilla y Len: 5 NAVARRE: 1
of stock with a view to achieving greater product
CatalONIA: 20 Basque Country : 4
turnover and offering the most innovative models and
the latest fashion designs. Valencia Autonomous RegiOn OF Murcia: 4
Community: 10
The basic product line has also been renewed to offer In Portugal: 2
even lower prices and to increase monofocal and high-
(*) Data at 28 February 2013.
range progressive lens quality.
Viajes El Corte Ingls is the exclusive distributor of The most recent events in which Viajes El Corte
the products of its wholesaler Tourmundial, which Ingls participated include the 2012 UEFA European
prepares a holiday product tailored to the markets Championship hosted by Poland and Ukraine, the
needs. As a retailer, Viajes El Corte Ingls offers the 2012 UEFA Europa League Final held in Bucharest,
end customer both its extensive network of offices and the 2012 World Handball Championships hosted
all the typical products and services of a travel agency by various Spanish cities and the World Junior
with the guarantee and quality that characterise Championships in Athletics held in Barcelona. Also
the Group. noteworthy were the 2nd National Conference of
Executives held in Valencia and the International
The Business Division, the leading agency in Union of Biochemistry and Molecular Biology congress
corporate customer services, specialises in both which took place in Seville.
large companies and SMEs. The Companys aim is to
provide its customers with the best services, reducing Viajes El Corte Ingls also has alternative sales
their travel costs based on the advice of our agents channels through which it provides customers with a
and the consulting department. Businesses are broad range of services. These channels include remote
also provided with global services and information sales, both tele-sales and online sales through its
from an integrated perspective and, to this end, we website, which allow the Company to offer a balanced
have entered into various international cooperation service distribution system tailored to our customers
agreements. needs.
Viajes El Corte Ingls is also specialised in the The promotional initiatives undertaken by Viajes
planning and organisation of congresses, conventions El Corte Ingls aim to encourage customers to make
30
advance holiday reservations for specific product or An extensive office network
seasonal campaigns such as the Semana del Crucero
(Cruise Week), Crucilandia (Cruiseland), Nieve Viajes El Corte Ingls has an extensive office
(Snow), A Viajar Verano (summer deals) or Mes del network both in Spain and abroad. In 2012, 15
Circuito(Circuit Tour Month). Also worth mentioning new branch offices were opened, including one in
are its campaigns offering specific products such Panam, the first in this country. At 2012 year-
as Viajes para Mayores de 55 aos (Holidays for end, there were a total of 506 branch offices in
the over 55s) and Turismo Social (Social Tourism), Spain and 93 abroad.
complemented by the sale of IMSERSO package
holidays through Viajes El Corte Ingls.
Informtica El Corte Ingls Group: management systems, inter alia, to the cloud. These
Informtica El Corte Ingls, projects represent an important advance in the
Investrnica and Telecor companys cooperation and communication systems.
32
Certificates and acknowledgements
Informtica El Corte Ingls software developers were awarded the Capability Maturity
Model Integration (CMMI) Level 5 maturity certificate, which is the highest possible level
and has only been awarded to eleven other companies in Spain.
34
As for the intelligent signage business line, Inves has
presented a new videowall solution (screens combined
to form a single image) of unparalleled quality
specifically designed to circulate advertising messages.
Telecor
36
In 2012 various promotional campaigns were launched Seguros El Corte Ingls
offering significant discounts, benefits and gift draws in
the whole range of insurance policies being sold. These Noteworthy among the commercial activities in
campaigns include most notably Mes Superseguro 2012 were the complete renewal of the range of
(SuperInsurance Month), Aniversario Fantstico individual life insurance products with Vida Esencial,
(Fantastic Anniversary), 8 Tickets de Oro (Eight Gold Vida Garanta and Vida Integral, the launch of a new
Vouchers), Pitgoras (Pythagoras), Tres Grandes Deseos individual accident insurance policy Garanta Triple
(Three Important Wishes), etc. and the opening of four new sales branches.
200.6
positive performance of the new products, especially
millions of euros in life insurance, most particularly in individual life
Pension plan assets under management insurance. Sound performances were also noted in net
profit, with growth of 11.7%, and the capital adequacy
6,663.84
Payment Formula amounted to EUR 1,389 million,
down 13.1% on 2011, and the number of contracts millions of euros
38
El Corte Ingls store in the Puerto Venecia
shopping centre (Zaragoza).