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Orange spends 8.5 million in two years to close physical stores in Spain

Date: March 23, 2023 Time: 01:19:32

Orange has spent just over 10 million euros in the last two years to close a part of the store network and reorganize the physical sales channel to redistribute the customer base more efficiently. This figure represents close to a third of all that the group has registered as restructuring expenses in the establishments of all its markets. The French multinational already announced, after executing the Employment Regulation File (ERE) for 400 employees, that it would terminate the spaces that were not really profitable for the group or that have significantly reduced customer traffic.

Between 2021 and 2022, the expense for the definitive closure of stores, mainly in franchise mode, fell to 8.5 million euros, according to an authorized company spokesperson confirms to La Información. To this we must add 1.6 million euros for what the company describes as “actions to redistribute the customer portfolio” among the different channels and the group’s brands. In this same ‘post-pandemic’ period, the entire group – which includes the European and African divisions – recorded a disbursement of 34 million euros.

Already in 2021, the French group announced that it would progressively reduce its store floor in Spain. That year more than 40 spaces were closed. The vast majority of the nearly 800 that it has in the country are franchises, and some 25 are managed directly by the company. In that exercise, insist that the objective was to “rationalize” the network of establishments and exploit an online channel that had been promoted after the outbreak of the coronavirus pandemic. All this in an environment of “lower income” with drops in traffic and a “very competitive” market, increasingly focused on low-cost connectivity products.

The CEO himself, Jean François Fallacher, said that they were going to be careful in the closures, which were analyzed “month by month”, a lot in billing and visitor traffic (this was reduced by 25% in 2021 compared to the previous ones). pre-Covid levels). These closures were concentrated in franchised stores and managed by distributors with whom the operator reached a marketing agreement.

At the end of that 2021, the workforce of the distribution subsidiary was 280 workers. It was a figure practically calculated a year before. From 2022 it is not yet available, but everything indicates that there were no significant changes. Almost all of those affected would have been relatively small franchises. The last workforce cut of the company at a global level in Spain was in 2021, with the 400 voluntary departures within the framework of an ERE that ended with a restructuring cost of 155 million euros, as admitted in its annual report. There were 10 million euros more than those provisioned to deal with compensation and early retirement.

Vodafone executed a plan to exit the management of its own physical spaces. Within the framework of the 2021 ERE, it announced the decision to disassociate itself from the 34 stores it had in the country. Within the framework of the negotiation with the unions, the nearly 230 employees who worked there may choose to join the distributors that assume the management of these spaces or benefit from the compensation agreed with the unions in that file.

Other figures

In the group’s accounts in France there are some relevant data from the operations in Spain during the past year, in which revenues fell by 1% despite the comeback in the second part. On the one hand, the growth in outstanding financing balances for mobile terminals that went from 469 million euros to almost 600 million -these are the loans provided to customers for the purchase of ‘smartphones’-. This reflects the good performance of its device sales (as in the rest of the sector). On the other hand, there are executed tax credits. The company kept unused more than 2,100 million of these tax losses to compensate for the future.

Regarding the accounting of the potential ‘joint venture’ with Másmóvil at 50% and what will enter through the agreed ‘megadividend’, the company has opted for prudence and has not placed the assets of the Spanish subsidiary as ‘discontinued operations’ How is it categorized in international tax regulations? He understands that since he has not yet obtained the green light from administrative authorities and the European Commission, he must keep the structure of the holding company unchanged. The valuation of the goodwill, on which a harsh adjustment was made in 2021 due to the economic difficulties perceived in the telecommunications sector in Spain, has remained downward, going from 3,170 to 2,700 million euros.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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