Sonae will invest up to 725 million in food retail by 2021

  • ECO News
  • 11 October 2019

The Portuguese Group will continue to invest heavily in the food retail business, having the ambition to open up to 70 stores.

Sonae will invest millions of euros in the food retail business, investing heavily in the concept of proximity in the coming years. It intends to invest 725 million euros by 2021, with most of the money being spent on the optimization of current spaces. But the company also want to expand, with a investment of 280 million for new units in Continente Bom Dia and Continente Modelo.

According to the strategic plan presented this Friday to investors through the Securities Market Commission (CMVM), in the next few years the company will open between 50 and 60 units of Continente Bom Dia and another 4 to 8 of Continente Modelo.

Sonae’s expansion is based on stores smaller than Continente, and therefore positioned next to larger population centres, will represent an investment of between 260 and 280 million euros. To this sum, to be spent between this year and 2021, Sonae will add another 445 million euros to the optimization of the remaining units.

This investment effort will take place in a context of stabilizing operating results, with Sonae assuming a “stable” EBITDA margin until 2021 and the debt to EBITDA ratio should remain below 3.5 times. At last, the Portuguese Group expects a turnover growth between 5.5% and 6%.

Sonae wants the sport department to ‘shine’ in a international level

Also in the strategic plan, the company said that wants to do more in the sportswear business. Iberian Sports Retail Group (ISGR), the result of a partnership between Sonae and JD Sprinter, is already the second largest sportswear retailer in the Iberian market, with a share of 11%. Last year, it achieved revenues of 600 million euros, but it will achieve even more in the coming years.

Sport Zone, JD, Sprinter and size? have, together, 345 stores, and Sonae’s goal is to reach 500 units in the coming years. And should allow the ISGR to reach one billion euros of revenue in the medium term.

In terms of EBITDA, Sonae expects to reach 100 million euros. In the first half of the year, and compared to the first half of last year, the operating results of this retail business unit showed a growth of 13%.