Zabka Group (ZAB) Q1 2025 earnings summary

Executive summary

• Q1 2025 sales to end customers reached PLN 6.6bn, up 15% year-over-year, driven by network expansion, like-for-like growth of 6%, and growth in Romania and digital channels.

• Adjusted EBITDA rose 15% to PLN 596m, with margin stable at 9%, supported by strong Polish store performance and digital business gains.

• Net store openings totaled 436 in Q1 (407 in Poland, 29 in Romania), expanding the network to 11,460 locations.

• Adjusted net loss for Q1 was PLN 77m, an improvement of PLN 20m year-over-year, reflecting typical seasonality.

• Continued deleveraging with net debt/Adjusted EBITDA at 1.6x, down from 2.1x year-over-year.

Financial highlights

• Like-for-like sales growth was 6.0% in Q1, in line with mid-single digit guidance and outpacing market growth of 4.1%.

• Gross profit increased 13.3% year-over-year to PLN 814m; cost of sales rose 12.9% year-over-year.

• Adjusted EBIT rose 16.6% year-over-year to PLN 157m; depreciation and amortization up 13.8% year-over-year.

• Free cash flow was PLN 91m, reflecting healthy EBITDA growth and ongoing capex for network expansion.

• Franchisee margin as a % of sales remained stable year-over-year at 18.3%.

Outlook and guidance

• Confident in achieving 2025 guidance: like-for-like growth in mid to high single digits, 1,100+ store openings, and adjusted EBITDA margin at the top end of 12-13% range.

• Targeting adjusted net profit margin of 3% in the near term.

• Continued deleveraging, aiming for net debt-to-EBITDA below 1x in the midterm.

• Seasonality expected to continue, with higher sales and EBITDA in summer months and lower in winter.

• Ongoing network expansion and store upgrades in Poland and Romania to drive future growth.