EUR 100.00 For Business Accounts Only

DIA: 3Q’20 TRADING UPDATE (ANÁLISIS BANCO SABADELL)

3Q'20 vs 3Q'19 Results
Sales: € 1.679 Bn (+2.5%);
9M'20 vs 9M'19 Results
Sales: € 5.194 Bn (+2.2%);

The company has released its trading update for 3Q’20 sales, showing LfL sales growth of +6.3%, which, as expected, means a slowdown vs. the +15% increase registered in 2Q’20 (and +3% in 1Q’20) due to both the end of the positive effect of the lockdown and a more challenging comparable basis. By regions, save for Argentina (~11% of sales) all of them registered positive rates, with Spain standing out (~66% of sales), as LfL sales in this region increased by +7.6% (vs. +20% in 2Q’20) and where, according to the company, the better international tourism data did not have a significant impact. In any case, this growth is reduced to +2.5% due to the closure of stores and the FX effect.
Despite being positive, this business performance is fully in line with expectations. In any case, the most relevant aspect will be operating performance, which we will not know until the company releases its full results on 11 November, where margins should continue to increase gradually, yet to a lesser extent. For these reasons, we do not expect a significant market reaction today, especially following the stock’s positive performance since March’s lows due to Covid-19 (+25% vs. Ibex 35, but -2% vs. sector). SELL. Target Price: € 0.10/sh (upside -11.93%)