Chapters
Annual Report 2018

7. Cost of Sales, Directly Related Costs and Other Operating expenses

Accounting Policy

Cost of sales, directly related costs and other operating expenses are recognized in the consolidated Income Statement when occurred.

Short-term employee benefits such as wages, salaries, social security contributions, bonuses, annual and sick leave are recognized in the year in which the related services are rendered by employees.

Leases, where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated Income Statement on a straight-line basis over the period of the lease.

For accounting policies related to share-based payments and pensions please refer to notes 26 and 25, respectively. For accounting policies related to depreciation, amortization and impairments please refer to notes 11, 13 and 12, respectively.

The following costs have been included in the operating result:

in thousands of EUR

Notes

2018

2017

Direct materials

848,533

792,680

Employee costs

1,278,302

1,162,720

Occupancy costs

515,335

498,079

Marketing & publicity costs

190,818

177,952

Depreciation and impairments

11

124,195

117,055

Amortization and impairments

12, 13

101,611

92,606

Distribution costs

81,020

65,809

Other costs

243,136

218,110

3,382,950

3,125,011

Occupancy costs include fixed and variable rent for stores, offices and other buildings under operating lease contracts of €402,193 (2017: €398,566).

The employee costs can be specified as follows:

in thousands of EUR

Notes

2018

2017

Salaries & wages

919,713

830,338

Social security

184,928

175,617

Pension costs - Defined benefit plans

25

7,624

4,434

Pension costs - Defined contribution plans

20,247

16,902

Share-based payments

26

3,770

11,274

Other employee-related costs

142,020

124,155

1,278,302

1,162,720

The average number of employees within the Group during 2018 (excluding the associates and joint ventures) in full-time equivalents was 32,400 (2017: 31,802).