Biedronka retailer assesses that Polish consumer is still very cautious

Poland's largest retail chain Biedronka, owned by Portuguese Jeronimo Martins, assesses that the consumer in Poland is still very cautious and competition is very high, CFO of Jeronimo Martins Group Ana Luisa Virginia told the teleconference.

"It's also a bit of a surprise to us that we are seeing a stabilisation or decline in volumes in the retail market in Poland. (...) I think there are several things contributing to this. Consumers in Poland are still very cautious," the CFO said.

"They expect energy prices to rise with the end of subsidies. (...) In addition, the German economy is not doing well, and this is affecting some sectors in Poland," she added.

Virginia pointed to the continuing war in the East as another reason for increased consumer's caution.

"Consumers are increasing their savings and entering 'wait and see' mode, given the uncertainty. They are also looking further afield, at the upcoming US elections and what will happen," she added.

The Biedronka chain's revenues amounted to EUR 11.5 billion in the first half of the year, up by 4.5 percent year on year in local currency terms.

In the second quarter alone, they amounted to EUR 5.8 billion, up by 0.1 percent in local currency.

LFL sales fell 0.2 percent in the first half of the year and by 4.6 percent in the second quarter.

As reported by the group, volumes at Biedronka increased in the second quarter of 2024 despite a negative calendar effect due to Easter being earlier than usual.

In the second half of the year, Biedronka will increase its investment in prices, strengthening its competitive position.

As indicated, with basket deflation, the implementation of this strategy will continue to put pressure on the EBITDA margin. This pressure may be higher in the second half of the year than in the first.

"We know that the Polish consumer is rational and looks at prices. If we don't have good prices, we will lose customers and then it will take a lot of money to get them back," the CFO said.

She added that competition in the Polish retail market is very intense.

"The market has decreased and the costs are increasing," she admitted.

In the first half of 2024, Jeronimo Martins Group EBITDA increased by 3.5 percent year on year to over EUR 1 billion on revenues of EUR 16.3 billion (up 12.3 percent year on year).

Net profit for the parent company was EUR 253 million (down 29.1 percent year on year).

"It has been an exceptionally challenging six months. (...) We are aware that the sharp drop in food inflation will affect revenues and this, together with already high costs, will affect profit levels this year," Virginia assessed.

Biedronka plans to add 130 to 150 locations (net) to its network this year. The refurbishment programme will include around 275 shops.

In the first half of the year, Biedronka opened 60 shops (51 net) and modernised 104 outlets. At the end of June, the chain had 3,620 shops.

pel/ ao/ han/