Jerónimo Martins has posted a like-for-like sales increase of 1.0% at its Portuguese retail operation, Pingo Doce, for full-year 2017, despite increased food inflation in the marketplace.
The retailer noted that Portuguese food inflation for the year was 1.5%, rising to as high as 2.0% in Q4.
However the consumer environment 'showed some dynamism' in the last quarter of the year, which helped Pingo Doce post a 3.0% like-for-like sales increase in the fourth quarter.
The group also opened a net nine new stores under the Pingo Doce banner over the course of 2017. Total sales at Pingo Doce were €3.67 billion, a 3.1% increase on the previous year.
Also in Portugal, the group's Recheio wholesale business posted 6.2% like-for-like growth for the year, including a 6.6% increase in Q4.
'In Portugal, we considered the challenges of a mature and promotions-driven food market, where, counter-intuitively, installed capacity keeps expanding,' Jerónimo Martins said in a statement. 'Pingo Doce reinforced the quality of its offer and price positioning and maintained LFL on positive territory while Recheio delivered a remarkable growth fully capturing the opportunities in its sector.'
Polish Market
At Biedronka, the group's biggest business (accounting for 68% of total sales, up from 66% last year), the business posted 8.6% like-for-like sales growth for the full year, and a total sales increase of 13.2% (+10.4% in local currency), to €11.1 billion.
In Poland, too, food inflation was a factor (+4.1% for the year), however Biedronka was also able to capitalise on a 'trading up' on the part of consumers, with an 'ever-improving assortment and innovative in and out campaigns executed through the year,' it said.
'Aware that price remains paramount for the Polish consumer, Biedronka captured the opportunities generated by higher inflation in specific products and strategic categories to reinforce price perception and trigger additional sales.'
Biedronka added a net 101 new stores, opening a total of 121 stores over the course of the year.
Global Reach
The group's nascent Colombia business was also up, achieving sales of €405 million, a 72.0% increase (+71.8% at constant exchange rates) following a steady store opening programme, which saw 169 stores opened, 77 of which in Q4.
'In Colombia, our focus is on building the future growth path for Ara,' the group said. 'In this context, 2017 was a year of strong investment in our teams and in expansion while continuing to fine-tune the value proposition. It ended up being a structuring year for our operation in Colombia that was able to open more than 160 stores in 12 months.'
Group sales at Jerónimo Martins stood at €16.3 billion, 11.3% higher than the previous year (+9.4% at constant exchange rates).
Commenting on the retail's performance, Barclays European Food Retail Equity Research said, "Despite the accelerating food inflation and continuing buoyant consumer environment in Poland, Biedronka LFL sales growth marked a sequential slowdown due to a more demanding basis of comparison. [...] We question the impact of Biedronka’s decelerating top line growth on the group’s margins, while operating costs in Poland and start-up losses in Colombia are set to increase."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
