Poland: domestic retailers in review

Date : 23 March 2017

We look at domestic retailers in Poland, Eurocash, Emperia Holding, Zabka, GK Specjal, and Alma Market, rounding up their 2016 results and outlook for 2017 onwards.

Mixed result for Eurocash as revenue grows but profits drop

Eurocash reported a 4.4% increase in 2016 sales revenue to reach PLN21.2bn (€5bn). However, the Polish retailer and distributor reported a 7% decline in its year-on-year profit.

Much of the sales growth is attributed to the dynamic expansion in its soft franchise networks, Groszek, Eurosklep, Lewiatan, and PSD. Further growth was derived from its hard franchise business Delikatesy Centrum, reporting a 9.1% increase in 2016 (1.6% in like-for-like sales).

In 2017 onwards, Eurocash plans to heavily expand on its current franchise banners as it reported negative impact on margins from new projects in 2016. Banners such as abc and Delikatesy Centrum will be expected to report double-digit growth in store numbers. Whereas, Eurocash’s cash & carry business, which reported a flat sales performance and declining profit, announced it will be closing 17 units in 2017 and 2018.

Positive sales and profits for Emperia Holding in 2016 and onwards

Emperia Holding’s retail chain, Stokrotka, reported 2016 sales revenue growth of 18.2% to reach PLN2.4bn (€56.2mn) and a profit increase of 13.9%. Over 70% of the sales growth in 2016 is attributed to the dynamic expansion of the Stokrotka convenience format and the franchise business that operates within the same channel.

The future for Emperia looks promising as it seeks to expand in the convenience channel with new banners, such as 5Market in 2018, and continued investment in the Stokrotka supermarket format. However, Emperia expects the supermarket channel to grow at a slower rate than convenience over the 2017-2020 period.

The Polish retailer stated that it will not rule out acquisition as an option to increase scale in the convenience channel. According to Cezary Baran vice president of Emperia Holding, there is a barrier in expanding store numbers in the supermarket channel and finding suitable locations. Cezary states that locations for convenience formats are available at greater numbers than when compared to the supermarkets which have a larger land requirement.

A new lease of life for Zabka with new owners

Newly acquired Zabka is expected to receive a significant invest from its new owners, CVC Partners. The investment is due to relaunch Zabka in 2017 as a proximity store format, which has been likened to the 7-eleven model.

The proximity store format will modernise the look and feel of Zabka stores as well as modify the assortment. Zabka products will be positioned around healthy eating and will focus more on food-to-go.

GK Specjal to maintain position and Alma Market closing stores

GK Specjal, which owns the retail franchise businesses, PSH Nasz Sklep and LD Holding, has reached nearly PLN8bn (€1.9bn) and 5,643 stores in 2016. The Polish company announced that is continuing to expand the franchise to over 6,000 stores in 2017, maintaining it as the second biggest retail network in Poland.

Alma Market continued to struggle as its revenues almost halved in 2016 to reach PLN 586mn (€137.2mn). In early 2017, Alma Market filed for bankruptcy as no buyers showed interest in its acquisition. So far in 2017 Alma Market is left with four Alma stores still in operation as other retailers, such as SPAR and Piotr i Pawel, acquired some of the sites. Alma Market continued to hold 45 branches of its premium grocery chain Krakowski Kredens in early 2017.