Dia shares: Price analysis before buying or selling

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ISIN code: ES0126775032

Ticker: BME: DIA

Index or market: BME

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Elements to consider before selling or buying Dia shares

Analysis N°1

As for the opportunities that the Dia Group could seize in the years to come, we note in particular the Group's desire to develop in emerging economies.

Analysis N°2

The strategy of buying up smaller retail chains that the Dia Group is currently following should, little by little, enable it to increase its profitability and gain new market shares.

Analysis N°3

Finally, the Dia group seems to have understood that it must gain visibility in order to attract new customers. To do this, it has implemented a new strategy based on the development of advertising via different channels.

Analysis N°4

First of all, competition is becoming increasingly strong on the discount market, particularly due to the development of certain Chinese networks. We will have to keep a close eye on this development.

Analysis N°5

Europe's difficulties in overcoming the current economic crisis could also be a hindrance to the development of Dia Group's activities.

Analysis N°6

Finally, the Group could also be affected by increasingly restrictive government policies and the implementation of stricter international standards.

Analysis before buying or selling Dia shares

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General presentation of Dia

Dia, which stands for Distribuidora Internacional de Alimentación, and whose name you probably already know, is a Spanish group specialized in large-scale food distribution. With a network of over 7,500 Dia and Schlecker supermarkets worldwide, it makes most of its profits in the Iberian Peninsula, but also in Brazil, Argentina, China, Portugal and France. In fact, the Dia supermarket chain follows a franchising model, which allows individuals to take over the management of one of the supermarkets and to pay back part of the profits to the whole company. Thus, through its stores around the world, it employs about 70,000 people between its own staff and those of the franchises.

Founded in Spain in 1979, it opened its first store in Madrid that year and quickly expanded worldwide. Over the years, several European parent companies have bought and sold their stakes in Dia, changing the names and stores of the group. This is the case, for example, of Carrefour, which in 2007 bought the 'Plus' supermarkets in Spain and integrated them into Dia, while in 2014 Dia sold the company to Carrefour in France.

Today, the group has well-established supermarkets in its sector and has a wide scope of action against them. Its business model is based on hard and soft discounting and its stores offer products tailored to each market through local brands and its own private label.

Dia's share price is listed on the Spanish Mercado Continuo market and is an integral part of the main index of the Spanish stock exchange, the Ibex 35.

The major competitors of Dia

The Dia group, despite a few setbacks and numerous stores taken over by competitors, particularly in France and by Carrefour, remains a big name in hard-discount distribution in Europe. As such, it faces strong competition from other brands trying to make a place for themselves in this highly coveted sector. You will discover here the list of the main competitors of Dia in Europe, which will help you to better analyze its stock exchange action and its future possibilities.

Lidl

Originating in Germany, with 4.6% of the supermarket market.

Leader Price

With a 3% market share and part of the Casino Group.

Ed

With a 3.7% stake and part of the French Carrefour group.

Aldi

Also German with 2.5% of the market share.

Netto

part of the Intermarché group, holds 1% of the market.

The Mutant

Holds 0.6% of the market share.

Other competitors

The Casino Group's Géant Discount chains have a 0.4% market share.

The major partners of Dia

Groupe Casino

In 2015, the Casino and DIA groups entered into an international strategic alliance in purchasing and services to improve their competitiveness vis-à-vis major National Brand food suppliers.

Amazon

In 2016, Dia became an Amazon partner. The partnership with DIA allows to enrich the offer at a time when online shopping is booming in the country. The recovery in consumption has led to a 23% increase in the overall turnover of the sector.

Stef

A collaboration between Dia and Stef started in 1991. STEF's site in San Agustin de Guadalix was responsible for the distribution of DIA's fresh and frozen food products to outlets in the centre of the country (notably Madrid), before extending it to the whole country and Portugal.

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The factors in favour of a rise in the Dia share price:

First of all, the main assets of the Dia Group are its highly targeted marketing strategy. The Dia group has indeed based its concept on the creation of a chain of discount supermarkets offering consumers everyday consumer products at very low prices. This is an effective way to position itself in the highly competitive supermarket market and thus to gain market share more easily in this period of declining household purchasing power. Of course, in order to maintain this low price policy, Dia has been pursuing a well thought-out and particularly effective strategy of minimising its operating costs for several years.

As far as the strengths of the Dia Group are concerned, the size of the company is of course important. This size can be measured by its workforce, as the group currently employs no less than 52,000 people in various countries, not only in Europe but worldwide. In total, the Dia Group operates a network of more than 2,800 stores around the world.

However, the Dia Group does not intend to rest on its laurels to maintain its market position and is constantly seeking to meet the new needs of its customers and prospects. Thus, the company has recently decided to implement some additional services such as order shipping. In this way, it aims both to improve the user experience of its current customers by delivering to their homes, but also to reach a new target that did not previously go to the store.

Finally, and still regarding the strengths of the Dia Group, shareholders and investors naturally appreciate the financial health of this company. Indeed, Dia benefits from a solid and stable financial position for several years with real performances in terms of annual revenues.

The factors in favour of a drop in the Dia share price:

Firstly, and although Dia stores attract a certain part of the population thanks to its low-price product policy, the necessary restrictions in terms of operational costs lead to some disadvantages. This of course concerns the choice of products, since the group's stores often suffer from a significant restriction in the choice of products, particularly with regard to international branded products. Indeed, in order to distribute discount products, Dia is obliged to sell mainly European branded products or products sold under the Dia white label. This limitation and the absence of popular products on the shelves has of course consequences on the frequentation of the stores since this lack of choice hinders some consumers.

Another weakness of this group is the repercussions of the European crisis, which has had a direct impact on the group's operations and whose negative effects on the company's profitability have not yet dissipated.

Finally, the last weak point of this company concerns of course the increasingly strong competition from the major players in this sector, including discount brands which are moving more and more towards a policy of product quality without touching prices, and the major classic brands which are also pursuing a strategy of lowering their sales prices while offering a wider selection of products from all over the world, including the major brands which are lacking in Dia stores.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

What are the brands owned by the Dia Group?

The Dia group operates several brands under different names. There is the Dia Market brand for convenience stores, Dia Fresh for specialised stores, Dia Maxi for department stores, Schlecker for specialised non-food stores, Clarel for convenience stores selling beauty, health and home products, Cada Dia for small rural stores, Minipreco and Mais Perto in Portugal.

What is the legal form of the Dia company?

Dia is a simplified joint stock company, which means that it is both a corporation like a public limited company and a partnership. It is therefore a mixed company. This legal form alleviates certain constraints. One of the specificities of an SAS is that it allows the dissociation of capital from power while preserving certain characteristics of the SA. This means in particular that a partner can have prerogatives independent of his share of capital.

Who owns the Dia Group?

The Dia group was acquired in June 2014 by the French group Carrefour. At that time, Dia had 800 stores in France with significant financial difficulties. The amount of this transaction was 600 million euros. Note that Dia was previously also owned by Carrefour but had been sold to Blue Capital in 2011. This company had then become the first shareholder of Dia on the Madrid stock exchange.

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Analysis before buying or selling Dia shares