Retailer Jerónimo Martins to invest €1.2B, entry into Slovakia in 2024

Portugal’s retailing giant Jerónimo Martins plans to invest €1.2 billion this year, an amount that “also takes into account the initial investment” to launch  operations in Slovakia, whose first shops should open at the end of 2024. “Our long-term vision remains valid and we reiterate our commitment to our investment programme which, in 2024, is expected to amount to €1.2 billion, in line with that made in 2023,” the group said in a statement sent to the Portuguese Securities Market Commission (CMVM).

In addition to the “expansion and remodelling of the shop networks, the programme includes strengthening of the logistics operation in Poland, Portugal and Colombia and also considers the initial investment to launch operations in Slovakia, whose first shops are due to open at the end of this year”.

In addition, “we also foresee greater investment in working capital, against a backdrop of deflation to which are added the slowdown in growth, continued high interest rates and constraints on access to credit, which will also continue to put pressure on our local commercial partners, especially in the private label and perishables categories, which could lead to reductions in payment terms.”

In its outlook for this year, the group led by Pedro Soares dos Santos emphasises that the food retail business has been operating since the end of last year “with deflation in its main categories – commodities, meat, dairy products, fruit and vegetables -“, so that this year Jerónimo Martins faces “a period in which a rapid reduction in sales prices is combined with high cost inflation at an unprecedented rate, which will continue to put pressure” on margins.

It also emphasises the geopolitical context, “marked by instability and complexity”, pointing out that the European Union “has lost influence and competitiveness, with its increasingly intricate and bureaucratic regulatory framework taking away European companies’ ability to compete on a global scale with their European counterparts“.

This is a year marked by elections to the European Parliament and in the United States, “the outcome of which is uncertain for the time being and could lead to a geopolitical turnaround”. At this juncture, says the group, “the evolution of consumer behaviour will be decisive for business performance and the dynamics of competitive environments“.

In Poland, where the group owns the Biedronka supermarket chain, the company will “continue to invest significantly in updating the salaries of its teams” and doesn’t rule out “that the EBITDA margin” of the supermarket chain “may come under greater pressure than in 2023”.

It plans to “add between 130 and 150 net locations to the shop network” of Biedronka and the refurbishment programme will cover more than 300 shops.

Polish health and wellness chain Hebe “will continue to focus its growth strategy on the e-commerce channel, which also forms the basis of its internationalisation strategy“. In Poland, “the reinforcement of the shop network foresees the opening of around 30 new locations,” it adds.

In Portugal, Pingo Doce plans to refurbish between 60 and 80 shops and open around 10 new locations. Recheio will continue to focus on the “value propositions” designed for each segment and the Amanhecer chain of shops, which already has 600 partners, “will continue its growth trajectory”.

In Colombia, the Ara supermarket chain is due to open 150 new shops, “while investing in new logistics capacity for 2024 and 2025, with one of the new distribution centres having already opened at the beginning” of this year.

Jerónimo Martins’ profit rose by 28.2% in 2023, compared to the same period in 2022, to €756 million.