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ECONOMY

Spain’s flagship department store El Corte Inglés posts record losses

Spain's venerable department store group El Corte Inglés, a barometer of the Spanish economy, reported Friday record annual losses due to pandemic lockdowns and a collapse in tourism.

Spain's flagship department store El Corte Inglés posts record losses
El Corte Inglés. Photo: GABRIEL BOUYS / AFP

One of Spain’s biggest private employers, the company posted a net loss of €2.9 billion ($3.5 billion) in the 12 months to the end of February, compared with a net profit of €310 million in the same period a year earlier.

If massive write-downs of €2.5 billion are excluded, the retailer said its net loss would total €445 million owing to “restrictions imposed due to Covid-19”.

Spain in mid-March 2020 imposed one of the world’s strictest coronavirus lockdowns with people ordered to stay home except to buy food,medicine or to seek medical care. The lockdown measures were only fully removed at the end of June.

“This result is mainly due to the cessation of much of its activity during the lockdown…as well as to the total absence of tourism, both national and international,” the company said in a statement.

El Corte Inglés in February announced a plan to cut between 3,000 and 3,500 jobs through voluntary departures.

Created in 1940 in Madrid, the family-run business swallowed its only other department store competitor in Spain, Galerias Preciados, in 1995.

It has pushed into all areas of Spanish life, selling everything from designer fashion, televisions, car insurance, kitchens, package holidays and hearing aids.

The privately-owned firm owns swathes of property in prime Spanish retail locations as it operates department stores in the centre of virtually every major Spanish city.

Spain’s economy contracted sharply by 10.8 percent in 2020, one of the worst performers in the eurozone, with its key tourism sector battered by the pandemic travel restrictions.

The government expects the economy will expand by 6.5 percent in 2021.

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ECONOMY

Spain’s middle-class youngsters the most likely to end up poor across all EU

Spain leads the ranking of EU countries with the highest risk of young people ending up in poverty as adults, despite coming from families without economic difficulties.

Spain is the fourth EU country with the highest inherited poverty
Spain is EU country with most middle-class young people who end up poor. Photo: Jaime ALEKOS / AFP

Spain is also the fourth EU country with the highest rate of inherited poverty risk, according to Eurostat, the EU Statistical Office.

Data on intergenerational poverty indicates that there is a correlation between the financial situation of the household you grew up in and the risk of being poor when you reach adulthood and in Spain, there is a strong link. 

The latest statistics available from 2019 show that the at-risk-of-poverty rate for the EU was 23 percent among adults aged 25 to 59 who grew up in a poor financial situation at home when they were 14 years old. This is 9.6 percentage points more than those who come from families without financial problems (13.4 percent). 

READ ALSO: Spain’s inflation soars to 29-year high

How the situation in Spain compares with the EU

Spain has become the EU country with the highest risk of poverty among adults who grew up in families with a good financial situation  – 16.6 percent.

This was followed by Latvia with 16 percent and Italy with 15.9 percent.

That statistics also show the countries where it is less likely to be poor after growing up in households without economic difficulties. These include the Czech Republic (5.9 percent), Slovakia (7.9 percent) and Finland (8.5 percent).

The overall poverty rate in the EU decreased by 0.1 percentage points between 2011 (13.5 percent) and 2019 (13.4 percent), but the largest increases were seen in Denmark (1.9 points more), Portugal (1.8 points), the Netherlands (1.7 points) and Spain (1.2 points).  

On the other hand, the biggest decreases in the poverty rate were seen in Croatia (-4 percent), Lithuania (-3.6 percent), Slovakia (-3.5 percent) and Ireland (-3.2 percent).

READ ALSO: Spain’s government feels heat as economic recovery lags

Inherited poverty

The stats revealed that Spain was also the fourth country with the highest rate of inherited poverty risk (30 percent), only behind Bulgaria (40.1 percent), Romania (32.7 percent) and Italy (30.7 percent).

This means that children of poor parents in Spain are also likely to be poor in adulthood. 

The countries with the lowest rate of inherited poverty risk were the Czech Republic (10.2 percent), Denmark (10.3 percent) and Finland (10.5 percent).

The average risk-of-poverty rate for the EU increased by 2.5 percentage points between 2011 (20.5 percent) and 2019 (23 percent), with the largest increases seen in Bulgaria (6 points more), Slovakia and Romania (4.3 points), Italy (4.2 points) and Spain (4.1 points).

The biggest drops were seen in Latvia (-8.5 points), Estonia (-8.0 points) and Croatia (-2.3 points). 

The largest gaps in people at risk of poverty when they reach adulthood were in Bulgaria (27.6 percentage points more among those who belong to families with a poor economic situation as teenagers compared to those who grew up in wealthy households), Romania (17.1), Italy (14.8), Greece (13.5) and Spain (13.4).

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