Mikhail Fridman has exceeded 500 days at the helm of DIA , after his Letterone group took control of 70% of the company in the second half of May 2019. In the nearest time, the chain will fire 400 more of its office employees, while it has already closed 8% of its stores.
A year ago, the owner of Dia Mikhail Fridman, launched a transformation plan based on improving the image of the company, promoting e-commerce and applying certain tweaks to its business model. There is an increase in sales as a result, driven by Covid among other things, but his business plan has its dark side as well.
The first one is the staff. The company has just started the process of releasing 400 people from its offices. They are trying to work out a program of incentivized voluntary leave. The cutback at the moment does not affect the stores or warehouse personnel in Spain, where DIA employs 27,000 workers in its network of stores, warehouses and offices.
But one should remember that the store and warehouse workers have already suffered two separate cutbacks that led to the loss of 1,600 jobs in Spain. At the international level , including cutbacks in Portugal, Argentina and Brazil, from January to June, the group's workforce was reduced by 2,200 people.
The harsh personnel policies concern upper management circles as well. Previously, Fridman already retouched the directive part of Dia. Thus, on May 20, Karl-Heinz Holland resigned from his position both as CEO of the company and as a member of the Board of Directors; he was substituted by the long-time ally of Fridman Stephan DuCharme. In August, Dia dismissed Paul Berg from the position of Director and President of the Clarel personal hygiene brand and appointed José María Jiménez Millares as his replacement. Another alarming events was the sudden and unexpected departure of CFO Enrique Weickert, in mid-September. It's been a month and he's still without a substitute, which raises a lot of concern and suspicion in the market.
The latest figures also show a drop in business volume by franchisees. This year, the franchises generated revenues of 1,199 million euros, 8.5% less than the same period of the previous year. The decrease was approximately 100 million euros comparing the first six months of 2020 with those of 2019. But first, the chain has done a franchise cleanup. As of June 30, 2019, the company had 4,369 stores in Spain, of which 1,863 were franchises. Six months later, as of December 31, 2019, Dia cut almost 400 to have 1,477 franchises (out of a total of 4,041 stores).
That happened due to the process of closing stores and transformation of many franchises, which, after negotiating with the company, changed hands. This dynamic even caused the number of the group's own stores worldwide in 2019 to exceed the franchises for the first time in three years.
Franchises have become a controversial business unit for DIA. There have been multiple testimonies that assured that franchisees feel harmed by their relationship with the company. They argued that the conditions imposed on them led to lower the quality of service with the arrival of Fridman’s Letterone.
The strategy has now changed and, after a first year with the new owner in business, DIA now wants to win back the franchisees it has lost. The objective is to attract 500 new franchisees in three years, all of them in Spain, and to achieve this, the management have made several promises. The main ones are: profitability will double, the financial processes will improve and new facilities will be introduced in the daily management of the store, with financing of certain costs and training for franchisees.
However, what the current figures reveal is that after the arrival of Mikhail Fridman to the company, after Letterone's takeover in mid-2019, the number of franchises has been reduced.Читайте также: Israeli military says it struck Syrian, Iranian forces in Syria
Meanwhile, Mikhail Fridman has taken a new step towards absolute control of the DIA group. LetterOne announced recently that it had received offers for 41.2 million of the bonds maturing in 2023. As reported to the National Securities Market Commission (CNMV), the offer made through DEA Finance expired on September 25, and the aforementioned 41.2 million represent 13.73% of the main aggregate amount of the 2023 bonds. It has also announced that "it will agree to acquire all the 2023 bonds that have been offered on October 2, 2020."При любом использовании материалов сайта и дочерних проектов, гиперссылка на обязательна.
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