After a turbulent few years and the wholesale sell off a number of businesses, Portugal's Jeronimo Martins retail group appears to be on the road to recovery.
The group ended 2002 in bullish mood after a steady improvement in sales throughout the year - although its debts remained high, despite the gains made on disposals - and it has carried over this good feeling into the first quarter of 2003.
In the first three months of 2003, Jeronimo Martins posted profits of €1.3 million, despite a one-off loss of €3.5 million. Sales increased across all the group's business areas, despite the fact that the key Easter period took place in the second quarter this year rather than the first as in 2002, but the effect of disposals meant that in actual terms, turnover dropped 16.9 per cent to €813.3 million.
Excluding the impact of the disposals, sales were flat at €768.2 million, just 0.7 per cent lower than in the previous year.
In the company's domestic market, the Pingo Doce supermarket chain posted a 6.3 per cent increase in sales as a result of a major brand repositioning during the previous year. Volume sales at the chain increased by 10 per cent.
The Portuguese hypermarket unit, Feira Nova, did not increase turnover, due in part to the Easter effect, but mainly as a result of an increasingly competitive environment and also the fact that one of its mini-hypers was refitted during the quarter. A new 10,000 square metre hypermarket in the Greater Lisbon area opened during the quarter is likely to give a major boost to sales in the months to come, however.
Total sales from these two divisions in Portugal (excluding Madeira) reached €351.2 million during the quarter, a 4.3 per cent improvement on the previous year. In addition, the Recheio cash & carry unit in Portugal continued to show good growth rates during a difficult quarter, particularly for the Horeca channel. Sales were up by 3.5 per cent year-on-year to €132.7 million.
In Poland, where the group operates under the Biedronka fascia, sales were down 7.1 per cent to €216.9 million, mainly because of the shift in the timing of Easter, an extremely important period for food sales in Poland. But like-for-like sales growth was 6.2 per cent, and sales in zloty terms rose 8.5 per cent. A poor exchange rate between the zloty and the euro also impacted the results.
Given the good first quarter performance despite the Easter effect, the company is confident that sales and profits will continue to improve in the rest of the year, especially the second quarter which will benefit from Easter sales. For the year as a whole, the company is predicting a return to profitability.