Poland’s Biedronka Must Absorb Cost Inflation Amid Tough Competition, Owner Says

Jerónimo Martins reported strong quarterly results late on Wednesday, which boosted its shares on Thursday, but again warned of a tough competitive environment that weighed on growth prospects in Poland’s retail market.

Biedronka accounts for around 70% of the group’s consolidated sales.

Jerónimo Martin’s chief financial officer Ana Luisa Virginia said Biedronka was operating with “low basket inflation and high cost inflation”, meaning all players were under pressure and this tended to intensify competition.

Competitive Market

“The Polish market continues to be very, very competitive… and we have to continue to be the leaders in price,” she said on a conference call, adding that Biedronka was “not so keen on passing the whole inflation” burden to consumers, and aimed to dilute costs through increased sales.

She said profitability was protected with this business model as a whole. Biedronka’s EBITDA margin increased to 7.9% as of September from 7.7% a year earlier, despite the fierce competition, while the Portuguese group’s margin rose to 6.8% from 6.6%.

In September, Biedronka had 3,829 stores in Poland, having opened a net 99 this year, and was on track to reach its target of 130 to 150 new stores in 2025.

After opening its first store in Slovakia in March, it now has eight stores there and expects to reach at least 50 nationwide by the end of the year.

Jerónimo Martins posted a nearly 15% rise in third-quarter net profit to €214 million ($250 million) on Wednesday, while net sales rose almost 8% to €9.14 billion.