Portuguese retail group Jerónimo Martins has reported 11% growth in first quarter 2020 sales, to €4.71 billion (+9.5% like-for-like), however it is expecting a more challenging marketplace in the coming months.
Net profit in the January to March period declined 43.8% to €35 million, due to the exchange rate differences accounted for under the new IFRS16 regulations, while net debt amounted to €2.06 billion.
Performance By Market
Polish supermarket chain Biedronka, which accounts for 69.2% of total sales, saw 12.6% turnover growth to €3.3 billion (+13.2% in local currency and +11.1% LFL).
Eleven new stores were opened during the reference period, taking its total store count to 3,010.
In Portugal, supermarket banner Pingo Doce increased sales by 3.5% to €936 million (LFL 3.5%), adding one new store, to give it a total of 442 outlets.
Cash and carry chain Recheio registered sales of €214 million (+0.2% year-on-year and +0.1% LFL).
Colombia’s Ara increased sales in local currency by 52.3% (LFL 34.3%), while sales in euros grew 38.9% to €235 million. The banner has opened 19 stores since January.
Group capex was €90 million in the period, of which 37% was invested in Poland and 28% in Portugal.
COVID-19 Effects
The initial effects of the COVID-19 pandemic on operations in Poland and Portugal were felt in the first two weeks of March, the group said, with a sharp growth in the sales of essential products due to stockpiling.
"At the moment, it is hard to predict the scale and depth of the ultimate effects of the pandemic," commented chief executive Pedro Soares dos Santos.
Due to restrictions on movement, a reduction in store hours, the introduction of safety measures and the impact of stockpiling, sales declined at both Pingo Doce and Biedronka in the last two weeks of March.
Jerónimo Martins reacted swiftly to the health emergency by activating existing contingency plans, anticipating or mitigating impacts on operations, it added.
In March, the estimated costs incurred by the group to guarantee safety and sustainability amounted to around €15.5 million.
One of the measures implemented was the closure of 36 Pingo Doce restaurants and one of the group's two central kitchens, as well as reductions to its take-away operation in store.
Future Investment
Given the uncertainty of the impacts of the pandemic, Jerónimo Martins has suspended investment in new stores and remodelling projects. However, all ongoing projects are being concluded and land acquisitions for future locations will not be compromised.
The group estimates that all its businesses will be impacted by the pandemic, but the degree and depth of these impacts will depend on the time span and containment actions adopted by each country.
"This crisis finds our group in a strong financial position, after a year of very good results. However, given the ongoing global recession, prudence advises us to reinforce our conservative capital structure management and keep the flexibility to capture potential opportunities," dos Santos added.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: The European Supermarket Magazine
