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Retail

Operating Profits Soar At Eurocash Group's Retail Business

By Steve Wynne-Jones
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Operating Profits Soar At Eurocash Group's Retail Business

Poland's Eurocash Group has seen EBITDA in its retail arm soar by 179% in the third quarter of its financial year, boosted by recent acquisitions.

The group posted sales of PLN 1.52 billion (€350 million) in its retail arm in the period, which was 7.5% higher than the previous year.

Sales Drivers

This was driven by a 6% sales increase at its Delikatesy Centrum franchise stores, and an 8.5% increase at company-owned stores, operating under the Delikatesy Centrum and Mila brands.

In addition, sales were up by more than 8% at its Inmedio newsagents.

EBITDA for the segment stood at PLN 74 million (€17.3 million) in the period, which before the application of IFRS 16 accounting standards stands at PLN 33 million (€7.7 million), close to a threefold increase on the PLN 12 million it reported the previous year.

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Period Of Integration

"After a period of integration of acquired supermarkets [...], which involved the necessity of incurring additional costs, we are beginning to see an improvement in their operating results," commented Jacek Owczarek, member of the board and financial director of Eurocash Group.

"Integration works are a very complex process and are still ongoing, but the most important thing is that they are going according to plan, and from the new year all stores will be managed within one organisational structure."

Eurocash Group's small supermarket portfolio, which will ultimately all operate under the Delikatesy Centrum brand, includes 986 franchise outlets and 575 company-owned stores, as of 30 September.

Wholesale Performance

Elsewhere, the group's wholesale division reported 'strong organic growth' in the period, of almost 7% year-on-year, to PLN 5.09 billion (€1.19 billion).

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As Owczarek explained, the driving force behind the segment's performance was "rapid growth" in the sale of tobacco and impulse products, which were up nearly 17%.

The number of stores in the group's 'abc' network, which are supplied by Eurocash's wholesale operations, stood at 8,816 at the end of September, which is up 257 stores compared to the same period last year.

Overall group revenue for the third quarter was PLN 6.67 billion (€1.56 billion), which was a 7% increase on the same period the previous year.

Group EBITDA was PLN 219 million, or PLN 129 million before the application of IFRS 16, which is a 23% increase year-on-year.

© 2019 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.

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