Zabka Group (ZAB) Q1 2025 earnings summary

Executive summary

• Sales to end customers rose 15% year-over-year to PLN 6.6 billion, driven by network expansion, like-for-like growth of 6%, and growth in Romania and digital channels, with the store network reaching 11,460 locations.

• Adjusted EBITDA increased 15% year-over-year to PLN 596 million, with margin stable at 9%, supported by strong Polish store performance and positive digital convenience offering (DCO) EBITDA.

• Adjusted net loss for Q1 was PLN 77 million, an improvement of PLN 20 million year-over-year, reflecting typical seasonality and lower interest on financial debt.

• Net store openings totaled 436 in Q1 (407 in Poland, 29 in Romania), maintaining robust rollout momentum and quality of expansion.

• The group received its first MSCI ESG AAA rating, placing it in the top 10% of its industry.

Financial highlights

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

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

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

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

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

Outlook and guidance

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

• Targeting adjusted net income margin improvement to 3% in the near term.

• Continued deleveraging with a midterm goal of net debt/EBITDA below 1x.

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