Portuguese retailing group Jerónimo Martins (JM) plans to invest €500-550 million in 2015, (up from €470 million last year), of which 60%, or around €330 million, will be invested in Poland.
JM believes that food deflation, particularly in Poland, will remain a challenge for the food retail sector at least during the first half of 2015. The priority will be to implement a sales booster programme at Biedronka and therefore reinforce its competitive edge, gradually regaining like-for-like sales momentum.
JM will adjust Biedronka’s cost structure to its new expansion targets and keep a strong focus on efficiency and productivity, hence confirming a 2015 floor of 6.5% EBITDA margin. The plan calls for the opening of 100 stores in 2015, joining the current 2,578.
Half of the investments earmarked for Portugal, according to CEO Pedro Soares dos Santos, will be in the new Valonga distribution center, to be completed in 16 months. The other half will go towards the opening of ten Pingo Doce supermarkets (both fully owned and in franchising), although the expansion “will largely depend on the issuing of licenses”. Separately, the Amanhecer brand (a partnership between JM with small and medium sized independent grocers) should open another 100 stores this year, on top of the existing 150.
Still in the field of investments, JM is preparing to strengthen its presence in Colombia, where it will channel €60-70 million in the opening of 50 Ara stores, joining the current 86. The strategy involves entering a new region (Caribbean Coast) by July. The impact of start-up losses in Ara and Hebe at the consolidated EBITDA level is expected to be in the range of €60-70 million.
Over the past year JM strengthened its focus on private label products, representing about 40% of sales, with over 200 releases and reissues. The plan is to reach 50% in the next two years.
© 2015 European Supermarket Magazine – your source for the latest retail news. Article written by Branislav Pekic
