Higher wages and keener pricing are cutting into the margins of Poland’s biggest supermarket chain, Biedronka.
The increasing financial pressure on the discount chain comes amid a continuing price war with Lidl, its biggest rival.
Biedronka’s earnings per share before tax (EBITDA) margin for the first half of 2024 fell from 8.5% to 7.6% compared to last year, according to the Portuguese-owned retailer.
“Our lower margins are the effect of raising wages for our shop and warehouse staff,” Luis Araújo, the CEO of Biedronka’s owner, Jeronimo Martins, said in an interview with the Polish business daily Puls Biznesu.
In January, Biedronka announced an average rise in wages of 17%, which Tomasz Dejtrowski, the company’s salaries director, said at the time, would cost the company some €140 million.
This would bring starting salaries in Biedronka up to the range of €1,056-1,290, a month.
At the same time, the retailer has been engaged in a price war with Lidl that has seen both companies trying to outflank each other when it comes to discounts and promotions. It seems the war is now eating into Biedronka’s margins.
But Araújo also said: “If we analyze our results, we see high growth and increasing market share.” He added that Biedronka’s overall sales grew by 4.5% during the first half of 2024 in comparison to the same period last year.
However, arch-rival Lidl cited a different set of figures.
On July 8, Lidl posted on X that in the first two quarters, it had shown growth of 2% in like-for-like revenue, while Biedronka’s like-for-like turnover had fallen by over 4%. In shop jargon, a like-for-like comparison is when a retailer compares sales recorded in the same number of stores a year ago.
Biedronka expanded its chain by just over 50 shops to 3,620 in 2023, while Lidl increased its total to 900 after hovering around the 890 level for a long time. The like-for-like figures refer to the total number of outlets, excluding the shops that opened last year.
Biedronka’s earnings per share before tax (EBITDA) margin for the first half of 2024 fell from 8.5% to 7.6% compared to last year, according to the Portuguese-owned retailer.
“Our lower margins are the effect of raising wages for our shop and warehouse staff,” Luis Araújo, the CEO of Biedronka’s owner, Jeronimo Martins, said in an interview with the Polish business daily Puls Biznesu.
In January, Biedronka announced an average rise in wages of 17%, which Tomasz Dejtrowski, the company’s salaries director, said at the time, would cost the company some €140 million.
This would bring starting salaries in Biedronka up to the range of €1,056-1,290, a month.
At the same time, the retailer has been engaged in a price war with Lidl that has seen both companies trying to outflank each other when it comes to discounts and promotions. It seems the war is now eating into Biedronka’s margins.
But Araújo also said: “If we analyze our results, we see high growth and increasing market share.” He added that Biedronka’s overall sales grew by 4.5% during the first half of 2024 in comparison to the same period last year.
However, arch-rival Lidl cited a different set of figures.
On July 8, Lidl posted on X that in the first two quarters, it had shown growth of 2% in like-for-like revenue, while Biedronka’s like-for-like turnover had fallen by over 4%. In shop jargon, a like-for-like comparison is when a retailer compares sales recorded in the same number of stores a year ago.
Biedronka expanded its chain by just over 50 shops to 3,620 in 2023, while Lidl increased its total to 900 after hovering around the 890 level for a long time. The like-for-like figures refer to the total number of outlets, excluding the shops that opened last year.
Source: TVP World, Puls Biznesu
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