We admire Jeronimo Martins’ exemplary model that should benefit from the move in favour of both discount and proximity within the industry going forward. Once again, the retailer showed its class by publishing its strongest LFL rates for two years at Biedronka (+3.8% in Q4), while Pingo Doce keeps showing an impressive performance (+4.1% LFL excl. fuel). Within a sector suffering from anorexic growth (a disruptive factor in a fixed-cost industry), Jeronimo is the best-in-class. Only the uncertainty about the implementation of a retail tax in Poland and to a lesser extent the valuation (22x 2016 P/E vs 16x for the panel or 15x excluding Tesco) prevent us from buying the stock.
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