May 12, 2016 / 7:11 AM / 2 years ago

UPDATE 1-Retailer DIA makes progress at home, but currencies bite

(Adds Spanish sales progress)

MADRID, May 12 (Reuters) - Spanish discount grocer DIA came closer to a return to sales growth in the first quarter, when sales picked up at home and in emerging markets, but earnings were hit by unfavourable currency swings, particularly in Brazil and Argentina.

The supermarket chain, which expanded rapidly during a double-dip recession in Spain, has been struggling to stabilise sales in its domestic market where more buoyant economic conditions have allowed shoppers to turn to more upmarket brands.

It said like-for-like sales, which strips out the effect of acquisitions, were down 0.3 percent in the first quarter in Spain and Portugal. But that was a stronger performance than in the previous three months.

DIA is aiming for like-for-like sales to turn positive in the second quarter of 2016, after it remodelled stores and revamped its range by selling more fresh produce.

It said revenues had been negatively affected in the first quarter by an early Easter week, when Spaniards tend to spend more on luxury food items.

“DIA has started the year on a very good footing,” Chief Executive Ricardo Curras said in a statement, adding that results were very promising in all its markets.

Spain has been without a new government since an inconclusive election last December and is now set for a re-run at the end of June, but this impasse has yet to have a noticeable impact on consumer spending.

DIA said that across the group net sales had slipped 5 percent from a year earlier to 2 billion euros ($2.28 billion), in line with forecasts, after unfavourable currency swings in markets such as Brazil and Argentina.

Sales would have risen 9 percent year-on-year excluding the foreign exchange effect, DIA said.

Adjusted earnings before interest, tax, depreciation and amortization dropped 1.2 percent to 117 million euros, also broadly in line with expectations in a Reuters poll of analysts. ($1 = 0.8755 euros) (Reporting by Sarah White; Editing by Julien Toyer and Jane Merriman)

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