Jumbo SA Stock

Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the JUMBO conference call and live webcast to present and discuss the full year 2025 financial results. [Operator Instructions] The conference is being recorded.

[Operator Instructions] At this time, I would like to turn the conference over to Mr. Apostolos-Evangelos Vakakis, Chairman of the BoD; Mr. Polys Polycarpou, CFO; and Mrs. Amalia Karamitsoli, Head of HR.

Ms. Karamitsoli, you may now proceed.

Thank you, Maria. Good afternoon, ladies and gentlemen. Thank you for joining JUMBO's Annual Investor and Analyst Conference Call. Before we begin, I would like to briefly walk you through the key highlights of our performance, and then I will hand over to our Chairman, Mr. Apostolos-Evangelos Vakakis for further comments.

2025 was another year of solid performance and resilience for the group. Total sales increased by 7% year-on-year, reaching approximately EUR 1.23 billion, reflecting sustained demand across all our markets. Gross margin stood at 54.7%, slightly lower compared to last year, mainly due to the increased contribution of franchise operations, which carry lower margins.

On a comparable basis, EBITDA rose by 5% to EUR 436 million, while net profit increased by 4% to EUR 320 million. Importantly, we continue to maintain a very strong balance sheet with a net cash position of EUR 473 million, providing us significant flexibility to support our investment plans. Return on capital employed remained very high at 27%, underlying the efficiency of our capital allocation.

During the year, we continued to return value to our shareholders. Total cash distribution reached EUR 131.5 million, while we also proceeded with the buyback and canceling of 1.25% of the total shares.

At the same time, we continue to expand our footprint. We opened our second store in Timisoara. We launched our online store in Bulgaria, and we acquired 3 previously leased stores in Greece, further strengthening our asset base.

Growth was broad-based in all our regions. Greece recorded a 9% increase in sales, Cyprus grew by 8%, Bulgaria by 5% and Romania by 4%. This performance reflects both the strength of our brand and also our ability to adapt in local market conditions.

Moving to the year ahead, we started 2026 on a positive note. Group sales for the first quarter increased by 7% year-on-year. Greece and Bulgaria posted a double-digit growth of 11%, while Cyprus recorded a 4% increase. And Romania, on the other hand, saw a decline of 4%, reflecting more challenging macroeconomic environment in the country.

Also during the first quarter, we proceeded with a cash distribution of approximately EUR 67 million or EUR 0.50 per share, further demonstrating our commitment to our shareholder returns. Our strategy remains focused on expansion and long-term value creation.

In Greece, we plan to develop at least 4 new stores in the next 3 years, while in Cyprus, we see that there is room for 2 additional stores in the medium term. In Bulgaria, we expect to add 1 more hyper store within the next 2 years. And in Romania, a new store in Baia Mare is scheduled to open in 2026. More broadly, our plan in Romania is to open at least 1 new store per year with the objective to double the number of the stores in the next decade.

At the same time, our franchise network continues to grow dynamically, both within existing markets and to new territories. Currently, our partners operate 45 stores across 7 countries. Specifically in Israel, we expect 3 to 4 new store openings in 2026, while their entry in Canada is progressing and the first store in Toronto is expected in early 2027.

We also continue to invest in the improvement of our e-commerce platform. Our focus is on improving customers' experience, operational efficiency, and we're also exploring the expansion into new markets. At the same time, we invest in our logistic infrastructure, which is critical to support our expansion. We have agreed to acquire a 60,000 square meter distribution center in Romania, while 2 additional distribution centers are under development in Greece. Total investments in logistics are expected to exceed EUR 95 million over the next 3 years.

Looking ahead for 2026, we expect sales growth at around 5%, net income to range between EUR 310 million to EUR 320 million and capital expenditure close to EUR 60 million.

To conclude, JUMBO continues to demonstrate strong fundamentals, consistent profitability and a clear strategic direction for future growth. Thank you for your attention. I now hand over the call to our Chairman, Mr. Apostolos-Evangelos Vakakis for the questions.

Good afternoon to everybody. I'm ready for the first question.

[Operator Instructions] The first audio question is from Stamatios Draziotis with Eurobank Equities.

Could I start with Turkey? Could you maybe elaborate on the strategic rationale behind the e-commerce launch approach? Should investors see this as a low CapEx way to test demand, brand awareness and price positioning before a physical rollout? Or is it just a stand-alone channel opportunity?

Yes. So practically, you are asking how we are going to approach the Turkish deal. So, we are going to employ our facilities in Romania, where we have established a state-of-the-art distribution center. And gradually, we will enter under the radar in the Turkish market in order to gain experience and market share. That will be only an e-commerce exercise, nothing more than that, nothing less than that. And one can say that for '26, it is a period of testing the waters.

Great. And if I could just follow up on the guidance. I just wondering, what is the gross margin assumption underpinning your '26 forecast about net profit settling, well flat to minus 3% year-on-year as indicated by the guidance?

It is really something that no one can give a clear understanding because all variables are unstable as we go through '26. We don't know the currency. We don't know the interest rates. We don't know how long the war will take or whatever. We have always cleared to the market that when we start guiding analysts about next year's performance or current year's performance, we only give the budgeted number. And therefore, these are not exact numbers. These are numbers that are compromised between various factors that move within a range. If one wants to be more specific, I would say that it won't be unsafe if people reduce the gross margin by 1 or 2 points.

The next question is from the line of Iakovos Kourtesis with Piraeus Securities.

My first question has to do with Balfin Group. You've said you are examining penetration in new markets along with Balfin Group. Would you be kind enough to let us know which markets do you currently examine?

And second question has to do with the possibility to deploy some pop-up stores. I don't know if it will be Romania or other markets. If you could further clarify on this, please?

Okay. First of all, I want to clarify that we are -- we have more work than what we can cope with. What makes interesting the proposal of the gentleman you just mentioned is that he is willing to invest in infrastructure in order to serve new countries. That will be in the north. So it is, let's say, a franchise by trust. It's still a premature effort. But we have signed or we are about to sign a franchise agreement. And to go forward, since we will be having, let's say, benefits without really committing resources or time in that direction. So that answers part of your question.

Can you remind me what was the second part of the question?

Which markets do you plan to proceed with a franchise agreement with Balfin Group? And if you plan to deploy a new model with the opening of smaller stores in some of your markets?

Hang on, these are 2 completely different issues. As I said, this gentleman is going to focus on what we call new northern markets. And he's going to run the operation from A to Z himself, by creating warehousing in China and serving these countries directly. Which countries will start first, which countries will start second, it's a little bit premature to say at this stage.

We have offered to him 4 countries. They have funny names. If you want, you can ask Amalia later to define -- I don't remember the names of these countries. But there are decent countries. And according to him, they are of great interest.

Regarding the pop-up issue, this is, as I said, a new effort that we have started studying for the Canadian market since it is there where we are going to exercise this new concept of, let's say, smaller stores inside shopping centers. And because of this study, most probably, we are going to introduce such stores in all countries where we operate in order to gain know-how and experience in parallel with the effort that we are going to go through in Canada.

The next question is from the line of Fani Tzioukalia with Euroxx Securities.

Just a quick one on my end and maybe a follow-up later. Could you please elaborate on the rationale behind acquiring your leased stores going forward?

The rationale of acquiring stores?

Yes, your own stores, yes.

Yes, because it makes a lot of sense. We don't acquire stores -- any store. We acquire stores that their financials prove that they are a good investment. So owning the property takes out the uncertainty of future negotiations. And we believe that since we are very profitable and very cash rich, it is a no-brainer. We should do so unless we can have, as an alternative, new stores, whether rented or both, which always will be prepared. But usually, they work on the opposite direction.

When the uncertainty is around, it makes more sense to buy stores. When uncertainty is resolved, then it makes more sense to focus on generic growth rather than buy stores. But all in all, the mission statement is one day to own all the stores that are of interest to us and are offered at prices that make sense.

Okay. And maybe one follow-up. You mentioned the 3 distribution centers you're currently setting a negotiation for a distribution center in Romania. Maybe when do you think this is going to be fully operational? Sorry if I missed that already.

And you mentioned also a CapEx of close to EUR 100 million over the next 3 years for this project, is that correct? And could you please allocate that in the window of the next 3 years?

No. What we have said in a simplified way is that part of our CapEx is directed towards new distribution centers. One distribution center is in Romania. I want to bring to your attention that Romania, it's still early stages. We will more or less double our stores in the coming years. So infrastructure should be in place there. And the other couple of stores -- the other couple of distribution centers was; one is in the north of Greece and one is in the south of Greece.

And it is safe to say that between 30% of our CapEx -- between 30% and 40% because it depends how you measure it and how you read this CapEx, will go towards distribution centers in the coming 3 years. The rest will go either to buy new stores or to rent or to start new stores and so on.

So you mentioned in the press release and sorry to insist on that, that you plan to spend around EUR 95 million over the next 3 years. So...

EUR 90 million is for distribution centers, not for total CapEx.

Yes, EUR 95 million in the next 3 years...

EUR 90 million or EUR 95 million, I mean...

EUR 90 million or EUR 95 million, so basically, the CapEx is around 30% to 40% of...

Of total CapEx.

Of total yearly CapEx. So...

Yes.

Okay. Anyway -- okay, okay. So, eventually, the distribution center in Romania will be operational in a year from now? Should we assume that it would be operational in 2027?

We have said that if the deal goes through, we will be -- the distribution center will be operational, not in full capacity in '26. '26 is in Romania, 27 is in the north of Greece and '28, '29 is then in the south of Greece.

The next question is from Maksim Nekrasov with Citibank.

I have a -- to follow up regarding the outlook and the margin guidance, and I understand that the future is very uncertain, but still something made you budget slightly lower net profit despite growing sales. So, I was just wondering if you can talk about the high-level factors that made you budget decrease in margin this year? And what is -- what are those factors related to?

And another question on the competition in Romania, in Bulgaria and Greece. Do you see any signs of increasing competition? And we've seen a lot of talks about action in Romania and expanded to Bulgaria. So any color on the competitive trends?

Let me focus a little bit on your question. When we talk about margin erosion, this is always a parameter that should be taken into account when we budget the year. And if one wants to make it very simple in one's mind, he would say that there is a cost implication of the wars around us. So, we don't really know the outcome of the wars. We don't know when the timing and so on.

We only know that during wars, there is a certain degree of inefficiency, which somehow needs to be put into the system. And otherwise, we may be guiding people in the wrong direction. So it has nothing to do with what you call direct or indirect competition because practically, I have always said that people who understand the JUMBO concept also understand that there is no competition to JUMBO by all these companies that you mentioned, which are competitive. But in a parallel field, not directly with JUMBO.

If one wanted to define who is the #1 competitor of JUMBO, I would say the hypers and the mass market stores. But having said that, JUMBO is a very small player by comparison to the world. And therefore, we work like a margin of error rather than a direct competitor to the dinosaurs or to the lions of the jungle. So yes, there is a cost of war. We call it cost of inefficiency because of the war, because of the various factors. But on the other hand, we also have a lot of benefits out of that because we are a company that has strong warehousing facilities, has positive cash flow, has a lot of money, has this, has the other.

But it will be wrong and not prudent to budget optimism during turbulent times. This is one of the classic mistakes inexperienced managers make where they try to address a problem with optimism. I resent this exercise. When I give the guidance that I'm giving, I want to alert people that almost all parameters that are affecting the bottom line or the top line are under question in today's environment, not for JUMBO, but for the whole industry as a whole, for the whole retail industry as a whole.

And whoever says that he can outguess what is happening today or he is better than Trump or better than Macron or better than this or better than the other, I don't want to hear about it. I am paid to worry. I'm paid to address not only positive implications on a day-to-day basis, but also negative ones. And I have to pre-account for that even if they are not visible yet.

If you want my personal view, which I can say, but after I alert people that 9 out of 10 times I'm wrong, is that better times are coming ahead of us, not worse times. But again, this is a personal view. And usually, I'm wrong.

Mr. Nekrasov are you done with your questions?

Yes.

We will now proceed with any written questions from our webcast participants. The first 2 questions are from Luisa Orsini Baroni from [ ORSA ]. Can you update us on business in Romania? And the second question is on the gross margin, can you tell us the impact of franchise versus the core business? Are you investing in gross margin to be even more competitive?

Okay. If one reads basic analysis of the Romanian market, one will read that the total market is in a recession mode because of unresolved structural problems still existing in Romania. If you ask me personally, I have great confidence in Romania. I think it's a nice country. It's a beautiful country. It's a well-structured country. And sooner or later, they will resolve these problems that they have. So we don't lose even 1 second of our sleep regarding our future presence in Romania. And we have indicated that whatever micro environment may say, we are committed to develop this market to its full. So this is not something to be debated.

If one ask us about the cost -- the margin that keeps cropping up. I don't know why. One would have to answer what would be the timing of the war, what would be the cost of the transport cost and things like that. If you focus in what other people are saying, problems may be resolved in 1 day or 1 week or 1 month or 1 year or generation. Nobody knows at this stage.

But again, that doesn't matter because if a temporary environment turns into, let's say, unpleasant but stable environment, we would adjust pricing accordingly in order to take account of this. I mean, we are hedging our bet with products. And therefore, we don't have the same worry that an analyst has because practically speaking, we are competing with other people who face the same problem with us. And I have mentioned before, and I'm mentioning it again, what I call the penguin effect.

We don't want to be the first on the water because the probability of being eaten by the hungry whales is very big. We don't want to be courageous or whatever. We want to be dumb and stupid and fall into the water once the whales are well fed. So I don't know why this thing of margin comes back and forward. I mean, for me, it is a -- let's say, an intellectual conversation that is not substantiated by JUMBO'S history in the last 40 years. I mean I believe that 40 years is enough for somebody to understand how JUMBO is working. We don't buy our turnover. We sell our products, but we don't want to bet against a wrong direction of the market. That's all.

The next question is from Gregory Randolph with Atopac Partners. You have been incredibly successful and had high market share in your core markets. Sometimes this can lead to complacency in retail as you are beating local competitors. How do you stay paranoid, well invested and ahead of the curve in such an environment?

I don't know what exactly is the question. We cannot apologize for being successful. But definitely, that doesn't come by accident. It comes by a coherent, simple-to-execute strategy. which, again, I pre-mentioned, is not based on driving the company like a rocket, but like driving the company as a jumbo plane that lifts, lands and makes round trips all through the year.

So definitely, complacency may be one of our biggest enemies because we are very successful for tens of years. But we love what we are doing, and we want to continue doing it. And because we try to make it more simple, despite the fact that we are gradually aging, we are still in a position to cope with the work needed to do so. Retail is detail, and there is no bigger and more dangerous competitor than your bad self. So I wouldn't worry so much. There are no signs that something is going wrong.

The next question is from Johan Schwartz with [ MSC Invest ]. Last year, JUMBO was willing to buy back share up to a minimum price of EUR 27.20. Currently, the share price is below that threshold. Why are you currently not buying back shares?

Because we believe that we can employ our capital in a more productive way. The option to buy shares is there, but it's the last option, not the first option. As I said before, personally, I feel optimistic about the future. And if one reads our guidance and our plans for the next 2 to 3 years, sees an aggressive investment plan based on solid numbers, not on wishful thinking. And therefore, the option of buying back shares for me is not appropriate during the specific time period.

The next question is from George Lampiris with powergame.gr. Tell us a few more things about your expansion in Canada. When are you going to start?

We were supposed to start this year, but we do not control this process ourselves. We will expand through a franchisee. And this franchisee happens to be an Israeli one. And Israelis now are at war. So thank God that they keep working. So they fight with one hand and with the other one -- the other hand, they work. They need to face some calm before they actually refocus as a nation towards expansion and the rest. I am very proud of my partners and what they have done despite the impossible challenges that they face because of the war. Canada is there. We are going to be there. And thank God, we are going to do as well as we did in Israel.

We have a follow-up question from Johan Schwartz with [ MSC Invest ]. Does all the merchandise destinated to franchise stores move through your warehouses in Greece or in same merchandise shipped to those franchises directly from China?

As I said, we control the distribution of our merchandise through our central warehouses. Nothing is shipped directly to anywhere. But having said that, as I said before, in the future, some countries which are not in the system today will be dealt through a franchise agreement where the warehousing will be in China and not in Greece.

We have another follow-up question from Johan Schwartz. Will the merchandise for Canada also move through your warehouses in Greece? Or will this merchandise be shipped directly from China to Canada?

Definitely from Greece.

The next question is from [indiscernible]. Currently, are there any problems in the supply chain? Comments on freight, and what is the current policy of the group?

If there is what, I missed the question. With the...?

Supply chain.

With the supply chain. The answer is that because of the cost of the petrol, there is a transport surcharge on all transported goods from around the globe. For the short run, we are splitting this cost together with our suppliers because we both feel that this is a temporary implication, and it should not affect prices. Therefore, because of the strength of the euro, plus the fact that suppliers are willing to participate in this surcharge for petrol costs, we are still in balance.

If one asks whether there are implications because of the war, the answer is evident, since no container ship passes through the Canal, the Suez Canal. So they have to go around Africa, and there is a cost implication because of that. How much of this is justified? How much is, let's say, self-serving for the interest of what we call logistic companies, you can be -- you can make your own judgment on that. But for the time being and because of the war, container ships have to go through Africa.

The next question is from Labis Michalopoulos with Lab Michalopoulos with N. Chryssochoidis Stock Brokerage. Please comment on impulse spending of consumers, the JUMBO concept short of speak versus launching with an e-shop in Turkey.

We don't have a clue what goes on in Turkey. We are currently investigating the mechanics and the realities of the place. So, all in all, you can only have an impression from me and not a real experience guidance. The impression is that Turks are willing to pay more for the same product a European pays. They make a lot of children.

And of course, despite the fact that Turkey is a very big country, a percentage of the population is only involved and active, let's say, in this part of the -- what we call European or international products. But as I said, for us, it's a plus business for the time being. It is -- it may turn into something else, but it's too early in the stages in order for us to lose any sleep. We are more involved with the mechanics and infrastructure and programs and logistics and business partners and so on. No tangible numbers are still on the table.

The next question is from [ Horn Roee ] with Top Alpha. The e-commerce platform, especially in Bulgaria, looks quite outdated compared to competitors. Do you have a time line for digital overhaul?

Definitely. As we go through, we are overhauling that. And we are not entering Turkey without this overhaul in place, and definitely, that will benefit Bulgaria as well.

The next question is from [indiscernible] How long do you plan to stay on the forefront of the battle?

A good question, but you will have to ask God. I don't plan to retire. That will take me out of the company legs first.

The next question is from George Tsilis with Alpha Finance. First question, how do you prioritize competing uses of capital?

We -- as I said, we have 3 options. The first option is new stores, either rented or bought. Then we have the second option, is to buy the stores that we already rent. And the third option is to return money to the shareholders because the first 2 options are not very attractive. Of course, that doesn't have to do with the day-to-day where, let's say, a certain amount of capital is allocated for store preservation as well as the new DCs and more generic infrastructure. So, to repeat again, solid growth or generic growth. Then second option, buy existing stores if they are offered to us at a competitive price. And third, if we are not very successful in either 1 or 2, return more money to the shareholders.

The second question. With Q1 sales growth already tracking pretty well and hearing you being optimistic for the future, what is embedded in the second half assumptions that justifies the flat lower profit guidance? Are you essentially guiding for a significant H2 deceleration?

I have answered this question by saying that if you are an optimist and you try to grow quicker in a difficult environment like the one all the world is facing. For me, it's the least of my options. If we are lucky, we can get better numbers than the ones we have budgeted. But I wouldn't bet on that. I'd like to take my time in choosing how the game will be played.

JUMBO is a company with a mission statement to be around 800 years from now. So to talk in terms of weeks or months or whatever to me, is meaningless. Here, we are talking about quarters or things like that, but everybody understands that the world is not in its best shape.

The next question is from [ George Fasseas ] with Alter Ego Media. The first question, what is the biggest risk to JUMBO'S business model today, rising supply chain costs, intensifying competition or shifting consumer behavior?

All parameters have a certain amount of risk involved, but none of these parameters is life-threatening. If one needs to worry, it is not people being contempt with what they are achieving. We are fully alert to the fact that if we are as good as last year, we are dead. We have to be better every year despite the fact that there are years that may not be as good as we would have liked. But during JUMBO'S history, we have gone through periods like that for many years. And so we have a track record to really back up what we are saying. I was born a chicken, and I plan to die a chicken.

The second question, if you were starting JUMBO from scratch today, what would you do differently?

I really don't know. It's too intellectual for me to answer this type of a question, because I never had this luxury as an option. So, as I said in previous presentations, I'm the fat guy hitting the drums, so the crew can row stronger as we head for the finish line. No luxury for cruises.

The next question is from George Athanasakis with Pantelakis Securities. First question, coming back to Turkey, do you think that you have the logistics and distribution in place to serve such a huge market with your online venture?

I didn't get the question. What is exactly the question?

It says coming back to Turkey, do you think that you have the logistics and distribution in place to serve such a huge market with your online venture?

First of all, the e-commerce is our own venture. We are not doing it with any strategic partner. And we are utilizing idle resources or capacity that is there in place. Turkey is a very, very difficult market. And one needs a lot of preparation if one wants to involve himself on the field. It's a little bit like the war today. I mean it's one thing bombing from United States and another thing landing in Iran. We will try to keep this option for the next generation unless it's absolutely necessary.

The second question is, what is your marketing budget for this venture?

As I said, in '26, it's next to 0. We plan to fly under the radar and measure things in a relaxed way. We don't have numbers in our budget that reflect the activity that we plan to introduce in Turkey.

The next question is from with Xanthi Gounari with Capital.gr. I have one question, if I may. Could you give us a sense of what percentage of group sales currently comes from e-commerce? And what is the target over the next 2, 3 years?

The e-commerce activity of JUMBO is a margin contributor, complementary service. It is not a service that we offer in order to compete with a JUMBO store. So we would be very happy if in each country, the e-commerce activity relates to a couple of JUMBO stores.

Thank you. Ladies and gentlemen, there are no further questions at this time. I will now hand back over to Mr. Vakakis for any closing comments. Thank you.

Thank you for listening to me. As I keep alerting people, our mission statement is the one of a Japanese company. We want to put in place all the fundamentals in order to be around for generations and not to create an exercise that has a finite potential. That's why we feel strange when people keep asking us about margins or pace and things like that.

I would say that, that doesn't make justice to the efforts everybody is making at JUMBO. At JUMBO, we focus on productivity. But when we say productivity, on all aspects of productivity, whether they are short term or long term. And we try to stay constantly stupid in order to end up, let's say, successful, not against perfection, but against our competitors. And during good times, but also bad times, and thank God, we had a lot of bad times in Greece in the last 10, 20 years, we have managed to prove that our strategy works.

It is not a strategy in question. Nobody really questions our strategy, except some analysts who want to promote another company or something like that. They are free to do so. But one should ask companies like the ones I've just heard, what is their current valuation? Are they growing or slowing?

And I want to leave it there because really, as I said before, we are only interested in what we are doing. What other people are doing, the better they do it, the more we can profit from them because we can get their best practice and duplicate it. Thank you for hearing me and good afternoon.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Jumbo conference call and live webcast to present and discuss the first half 2025 financial results. The conference is being recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Apostolos-Evangelos Vakakis, Chairman of the Board of Directors; Mr. Polys Polycarpou, CFO; and Ms. Amalia Karamitsoli, Head of Investor Relations.

Ms. Karamitsoli, you may now proceed.

Thanks, Constantino. Good afternoon, everyone, and thank you for joining our call today. I will walk you through Jumbo's performance for the first half of 2025, highlight the main operational developments and then to share our outlook for the rest of the year.

In the first half of the year, Jumbo sales grew by 8% reaching EUR 497 million. On a comparable basis, EBITDA increased by 7% to EUR 165 million and while net profit increased by 5% to EUR 117 million. Our gross margin came at 54%. This represents the strong growth franchise sales, which as you know, carry a lower margin than our own-operated stores. At the same time, our net cash position remained very strong at almost EUR 318 million. CapEx during the period was EUR 14 million.

Let me also highlight the key steps we have taken so far. In March, we distributed EUR 0.4667 per share to our shareholders and EUR 0.50 share in July, underlying our commitment to return value to shareholder partners. We also opened our second store in Timisoara, Romania, further strengthening our presence in the market. In June, we launched our online store in Bulgaria, marking another important milestone to our digital expansion. In August, we completed the cancellation of the listing and the listing of 1.25% of our total shares. Year-to-date, we have also bought 2 leased store in Greece.

Looking at the regional sales growth, which was up 9%. Cyprus was up 7%, Bulgaria by 2% and Romania up 8%. Franchise sales grew strongly by 52%, reaching EUR 38 million while e-commerce sales accounted for 2.3% of our total group sales. Our budget for the year is based on scenario that sales will grow around 8%, the Christmas season is expected to play as usually a decisive role. Other things being equal, our net income to flirt with the 2024 organic level. CapEx for the year may end up below EUR 60 million. Our dividend policy remains unchanged, 1/3 of the consolidated profit with potential of additional payouts depending on market conditions and cash reserves.

At the same time, we continue to invest in the future, modernize our ERP system, strengthening our cybersecurity, introducing new AI tools. We also plan to add 2 distribution centers with a total investment of EUR 60 million to be completed in the next 3 to 5 years. Going forward, through steady steps, the group aims to open another 2 new stores per year, adjusting the pace of expansion to the conditions of each market. At the same time, we further strengthening our strategy by acquiring stores that are currently operated under lease agreements.

To conclude, Jumbo continues to operate from a position of financial strength. This allows us to invest in growth, expand our network and at the same time, return value to our shareholder partners.

Thank you all for your attention. Mr. Apostolos-Evangelos Vakakis will now take your questions.

I'm all ears. Good afternoon.

[Operator Instructions] The first question comes from the line of Fani Tzioukalia with Euroxx Securities.

A couple of questions on my side, please. First of all, could you please provide some color on the gross profit margin for the first half? And how do you see this evolving in the second half? Let's take it question by question so it's easier for everyone to follow.

Your question is not very clear. What exactly are your asking?

Okay. My question, let me rephrase then. So my question is that, could you please explain the gross profit margin drop on a year-on-year basis for the first half of 2025? And what do you expect towards the second half of the year?

Who knows is the answer. I mean, we have given the actual number for the first part. And we have indicated that theoretically. The second part will make the margin slightly improved. And this is subject to market conditions that change every day.

Okay. And behind the first half of 2025, any color on the reason why the gross profit margin has been weaker on a year-on-year basis in the first half?

It's weaker because of the market conditions. I mean, we had events like the increase of the VAT in Romania. We have events like yesterday that one plane fall about a few years from our store in Eilat in Israel. And so we live in turbulent times. And as a result of that, it is more than logical to expect also some relative turbulence on our gross margin as well. This is in line with what we have said from the beginning of the year, as we have guided our business partners about the realities of the conditions we currently face.

Okay. Regarding my second question then, could you please provide some color on the inventory buildup going forward? We saw some increase in the first half. And how do you see inventory building up going forward? And also, do you see any change in the product mix that is being sourced as well?

The idea always is to defend the gross margin. And as a result of that, one way to do so is by looking more through into the product mix as well as new opportunities. But as I said, relative marginal fluctuations as we go through such a turbulent period, I believe it is within what we call margin of error.

Okay. My third question would be with regards to your network rollout targets. Could you clarify the target in Romania because in yesterday's press release you indicated one store per annum and this is in contradiction with previous press release for a double network in the next 8 years. So can you please clarify on this deviation?

What we have said and what we are trying to be aligned with is that we expect 2 to 3 stores per year as a rollout for the group. This may change for -- from year to year, from country to country. And this is the result of many implications that we have to deal with. So if, for example, in a country like Romania, it makes practically more sense to go a little bit slower due to the fact that there are many inherent problems short term into the country. We speed up another story in another area. But all in all, we are there to stay in Romania. We are doing deals every day. And we are rolling stores in line with our general plan. This cannot be questioned or interfered, but the timing varies.

Yes, please allow me to quickly quote a press release dated on September 9 of this year that you currently operate 20 stores and 1 online store in Romania, while the strategic goal for the next 8 years is to double the store network. I'm referring to this specific comment dated September 4, which is 3 weeks ago.

This is what we said. What are you saying? I don't know.

No, no. In yesterday's press release, you're indicating 1 store per annum, which is contradicting a press release from the company 3 weeks ago. But -- if you can provide some color on that.

Our view is when we talk about the future, the maximum is 18 months, not 8 years. And therefore, it is more than fair to indicate that we are going through a period in Romania, but it makes more sense, for example, to buy stores rather than open stores. While in other areas that are doing better, it makes also sense to open stores rather than wait for a little bit later. But all in all, we are not -- I don't feel that we are deviating from our plans as we go forward.

But I have to bring to your attention the vagueness of the international environment. I personally have lost contact with what goes around in the world. I really don't know what is the issue with tariffs, whether they exist, whether they don't exist, whether they have been postponed, whether this, whether the other. So it's -- our operation currently is from day-to-day and week-to-week. If one wants to start addressing months or years, it is something that he may be exposed into something that he said and he shouldn't have said it. But all in all, we are giving a picture for the years to come. And this picture will not change unless the world changed.

Okay. And where is the next store opening in Romania? In which city?

Pardon?

In which city is the next store opening in Romania? Is it Baia Mare or where should we expect that?

Yes, Baia Mare, probably would be the next one. And then we have [ Cluj ]. Currently, we are negotiating in many other locations. As I said, this is an ongoing exercise, but I must repeat constantly that we are not buying our turnover. We are directing generic growth as we go to the future where we feel it is best-suited.

Okay. And one last question from my side. And how do you see competition in Romania evolving with -- in terms of Action Group and other competitors as well?

Again, can you repeat the question, Fani?

Yes. Sorry, yes, my question is how do you see competition in Romania evolving? And what is your target versus others? What is the strategy around that, competition in Romania?

Romania as in country has slowed down because of political turbulence there. The size that we have is not so big in order to have anything to do with competition like that. We are way -- we have a long way to go before we start involving ourselves with worries of this nature.

So you don't feel any effects from the competition for now -- at least for now?

What we face in Romania, also the competition faces. It's no secret that Romania is going through some turbulent times currently because of the political situation there. And we only had announcement 1 month ago about the VAT change, about the squeezing financing and the rest. Yesterday, I just happened to be in Romania. I've heard that the next Prime Minister, who comes from the left, will take back the VAT and will take -- will distribute money to people, things like that. So I think we really don't pay too much attention to what people are saying. My feeling is that definitely better times will come for Romania. But when that would be, is anybody's guess. As far as we are concerned, we are still at the beginning of an effort, not at the end of an effort.

Okay. And the last one from my side, apologies for taking so much time. Can you please reiterate what was the net profit guidance for 2025?

The what?

The net profit indication for 2025?

We have indicated in our announcement, but we are working very hard to par the number to last year's number for organic, of course, unless we have another catastrophe in one of our stores, and we can make something in addition to that. But the odds are that to improve on last year's profitability is a very, very difficult exercise. It's not impossible, but one would say that we have a 49% chance of achieving that and not a 51%. And as a result of that, we have to say the reality as we read it and as we interpret it, and everybody must make his judgment accordingly.

I keep repeating on all our encounters that we always give our budgeted numbers as guidance. And theoretically, this is a little bit conservative, but as conditions continue to be vague and deteriorating, it's anybody's guess whether this traditional approach is very meaningful or not. In a few days, we will announce the September performance that includes also the back-to-school period. And then we have to run for the finish, which is December period.

Which should be in the range, I think it accounts additionally for around 25% to 30%, let's say, of your total turnover, is that correct?

I don't know, I am not very good at maths. Whether it's 20% or whatever, I really -- usually 17%, I think is December, up to 4% for November and October, 8% and 17%, 25%, 26%, 27%, around that.

The next question comes from the line of Stamatios Draziotis with Eurobank Equities.

Yes. Can I take you back to the gross margin question and the drivers that led to the decline in H1. I mean, we have several things that might have affected like pricing decisions, product mix, or the franchise mix. And actually, you mentioned the latter, but given that franchise sales are still a very small part of group turnover, I would have thought that the impact there is limited. So could you maybe elaborate on to what extent each of these factors led to the gross margin decline, please?

We have given this information in our announcement. And as a result of that, everybody can make his math on that. To repeat it once more, I have difficulty to understand what exactly is the purpose. We have provided all this information directly or indirectly to analysts so they can do the numbers in a better way for them.

That's fine. That's fine. Can I ask another question? Because in your statement, you actually highlight that the benefit from the depreciation of the U.S. dollar will become visible in H2. Yet, at the same time, the message around full year profitability, which assumes which points to a decline -- actually points to a decline in H2. So you say if sales -- the sales trajectory remains at plus 8%, then profits will be at par at least year-on-year. But this actually points to a decline in H2 profits, although you will have the benefit from the depreciation of the U.S. dollar. So could you maybe help us reconcile these 2 messages and explain what -- how you're thinking about the bridge from H1 to full year, please?

To think what? I'm not very sure what your question is. If you ask analysts, I would say, 51% say that the dollar would be weakened further. So that's a good sign for us. And that will help the gross margin as we go forward to the end of the year as well as to the first part of next year. At the same time, I have also heard Trump's suggestion to the world to put tariffs on China and India and all the rest of the world because they buy cheap petrol from -- so really, it goes beyond that.

If I could participate in this sort of complicated world in a productive way, I wouldn't be selling toys. I would be doing a better thing in my life. We really believe that unless we have something which is unexpected or mind blowing, which is anybody's guess what will be the next step, we are as good as any to support the numbers that we have already indicated. But as I keep saying, I am not the one who makes the decisions. We are just in line with the decisions taken by others.

[Operator Instructions] Ladies and gentlemen, there are no further audio questions, and we will now move on to our webcast questions. The first webcast question comes from Iakovos Kourtesis with Piraeus Securities and I quote, "Can you please clarify if we will have any store openings by year end?"

We have store improvements going through that would add sale areas at the expense of warehouse areas, but no further store opening for this year.

Second part of my first question is, and I quote is, "Do you have any update on Fox Group's plans to open franchise stores under Jumbo brand name in Canada?"

Yes. The Fox has indicated their interest. We have negotiated a contract. And according to their plans, they believe that they can make it possible at the end of '26.

Third part of the first question, and I quote, "Can you quantify the annual amount that you will save in your OpEx from the acquisition of the 4 leased stores in Greece this year?"

If I can quantify what?

Can you quantify the annual amount that you will save in your OpEx for the acquisition of the 4 leased stores in Greece this year?

The answer is no. We really don't go into such detail. The process is very simplistic. During crisis, we try to obtain the best possible price. We can buy an asset. And hopefully, that will help us reduce our OpEx. But by how much depends how many -- when deals would be completed, as an average, how much. We don't over analyze this. I think it's counterproductive in my mind. It's a direction what matters, not so much the actual numbers that make that difference. Plus, of course, our long-term strategy is that we want a well-capitalized company that fully owns all its stores. And practically, that will help us be alive for many, many years to come. And if that is not possible to be alive when other people are dead. We would be the last to die.

Fourth part of the first question, "When exactly did you plan to commence the construction of the 2 distribution centers?"

The first one, we will cut ground in a month or so. On the second one, we are still negotiating the price of the land. Distribution centers is an investment towards improving our productivity. And as a result of that, it is, let's say, an investment worth executing. Really, we don't lose too much sleep on that. Theoretically, we will not enjoy the services of the first new distribution center before the end of '27. And most probably the second one would be one year later. But we will be constructing both in parallel with a gap of, I think, 9 months, the one before the other.

The next webcast question comes from George Athanasakis with Pantelakis Securities, and I quote, "What after-tax margin do you make on franchise sales, including the royalty fee you are getting on their sales? Do you extend any credit to them? Do you invest any capital at all in franchises?"

The idea is to have, what we call, zero risk, although such a notion does not exist because as franchisees grow, we need to grow our infrastructure to support them, but we charge them accordingly. And theoretically, we can shrink if this infrastructure is put into question for reasons that have to do with the country that we are dealing. We don't lend money to anybody. We only get cash for it. And the idea we have is that unless Europe finds its footing, we really don't have, let's say, an easy source of income to help us manage the numbers of the Greek company because the Greek company is faced with many challenges, like, for example, that we don't have an improvement in the birth rate or a visible improvement on the disposable income. Therefore, everything that we can do to keep us healthy, but always with relatively very close to zero risk, we will take it. But we don't really see it as anything more than that because we are not in control of this process ourselves. And that's the reason we are franchising it. We don't want to be deviated from our course of action.

The next webcast question comes from [indiscernible] and I quote, "What proportion of the sales are from franchisees? In other words, what proportion of the volume and sales comes from franchisees."

We have provided this information. One can read it in the report we have taken out. Out of hand, I don't have this information.

The next webcast question comes from Gregory from [indiscernible] Partners and I quote, "When you say net income organically, you mean excluding the insurance proceeds, why would that be flat year-on-year for the year when it was 5% in first half and the benefits of currency should be stronger in second half?"

Because it is common knowledge, I think, that people should not be optimistic about the future. People should be really cautious about the future. And that's the reason we always take a very cautious approach. That doesn't mean, of course, that we are not optimistic because we remain optimistic. We do understand that we have to grow. We do understand that we have to increase our footage on new stores and things like that. But during turbulent times, like the ones we are going through, optimism may be a fatal disease, while pessimism is a much more prudent approach. I keep repeating to people that we have to be very, very, very cautious on every decision we make in order to be able to support what we have promised. Now if we can -- if you can assure us that we will do better, you would not take it from my mouth this. It may or it may not, but the probability is 49%, that it will happen, not 51%.

The next webcast question comes from [indiscernible] and I quote, "How can we imagine the difference between gross margin of franchise and the ordinary shops?"

On franchisees, we make 3 or 4 points on the turnover with franchisee. Thus, we charge them at cost for handling their orders and internal cost, which contributes to our overheads as well. This is what we make out of a franchisee. So practically speaking, a franchisee is a contributor to our overhead bill. It is not a vehicle to reach it.

The next webcast question is a follow-up question from [indiscernible], and I quote, "Can you elaborate on your hedging policy? And what is the likely evolution of profitability for second half and 2026?"

We don't have a clue. We don't have a clue if you give me what's the cost of transport would be, if you give me what the exchange rate would be, it is -- it would be very helpful to us. But since nobody knows that, what we said is that currently, we have tailwind on these cost parameters. But let's say, in the future, either in the near or longer than the near -- in the mid- or long term. We may also face a headwind as well. If we look at it statically, theoretically, we are in a better situation than what we were a year ago.

The next webcast question comes from [indiscernible] with [ MSC Invest ], and I quote, "Why did the inventories rise so much?"

Because conditions have turned in our favor. And as a result of that, the more we have product and the less we have money, we can hedge better our future results. The problem is that we were near capacity. We cannot buy more because we cannot handle it. But if I was given the choice, I would have bought double or 3x, but we cannot support this desire. We have to balance many parameters in order to bring something that makes sense. So a growth in the region of 20% or whatever is, I would say, the maximum safe growth without really putting into jeopardy a fundamental parameter or a hidden treat.

The next webcast question comes from Maksim Nekrasov with Citi and I quote, "Do you plan to pay dividend in second half 2025?"

The answer is no. We cannot do all things at the same time. What we have said is that we are beefing now. We have paid 2 dividends. We have indicated that it is our strategy to pay 1/3 of our total profits in dividend the years to come, average year after year. If conditions are bad, we buy all stores. If conditions are good, we may pay a little bit more. But as I keep saying, I have difficulty to understand how conditions will be good. In order to be good, something must change, which is productivity. Everybody tries that, let's say, decisions that are taking centrally from government do not help productivity. So we don't have tailwind. We have only tailwind because of the currency and the transport cost. But this made them against us very easily. We have a very good cash flow situation. But this may change if we face tariffs or things like that.

Really, it goes beyond our capacity to make a guess or to take a bet. As we stand today, of course, since we have tailwind, we are buying as much as possible. And we are hedging, let's say, the year-end results and the first part of next year's results. Beyond that, it wouldn't be very prudent to pre-anticipate things because conditions may get even better or may get worse. So it's a wait-and-see situation.

The next question comes from Zara C. with Lazard Asset Management, and I quote, "Please, can you further elaborate on why macro weakness in Romania and Israel is affecting the gross margin? And are you investing in price? Or is the mix less favorable because, for example, consumers are down-trading?"

As I said, the government in Romania increased the VAT by 2 points. So we had an impact on our gross margin by 10%, practically. And on top of that, it has rebalanced the various VAT on products against the consumer. Why they have done that? Hopefully, they know what they are doing. Only that affected our gross margin, all other things equal to -- during a turbulent time like in Romania to attractively about the future. I don't recommend it to anybody to do so. It is the first penguins that are eaten by the whales that jump into the water. Once the whales are well fed, then of course, penguins like ourselves would jump also into the water, but later, not -- we are not having any sense of heroism into that.

And if one suggests that one should adjust prices upwards in an environment that has not consolidated recent developments in Romania, it's not a good advice. Bear in mind that we are making a huge gross margin, okay? So to be greedy, one can have dear consequences. So better be stupid than sorry.

The next webcast question comes from Will James with Guinness Global Investors, and I quote, "What was behind the very strong growth in sales to franchisees in the first half 2025?"

The flow of products has improved into our warehouses, allowing us to grow, ship more to franchisees without this affecting our core business. There's no magic to that. It's a byproduct of improving conditions in the transport equilibrium.

The next webcast question comes from Ali Amiri-Garroussi from Polar, and I quote, "You are guiding 2025 to March 2024's net profit number. Should we be looking at 2024's net profit, including the insurance receipt of EUR 320 million, or excluding it, EUR 310 million of the targets?"

Excluding. We said that we will compare apples with apples. We cannot compare a windfall that happened because of an accident. But let's hope that we may have another accident this year or two accidents and make more money, but not yet.

The next question comes from [ Gregory ] with [indiscernible] Partners, and I quote, "I may have misunderstood, if so, sorry. You mentioned the time is not right for opening as many stores in Romania, but maybe buying stores. Do you mean buying the real estate of the stores you already own or buying stores from existing stores and renovating them to be Jumbo stores?"

What we practically say is that we don't leave an opportunity to pass. If one of the rented stores is offered to us at the price that makes sense and the price that makes sense is that it contributes towards overheads. So less rental costs. So practically more contribution towards inefficiencies on the operating level.

On top of that, definitely, since we have a growth plan for the future, we try to locate locations, whether that's our building that we will renovate or pieces of land. But again, at the price that makes sense because the long-term expectancy of things to happen is that it's not in our favor, this thing. So we really have to utilize opportunities in order for us to make a move that makes sense and not having to buy our turnover, even if buying our turnover is cheap due to our cash flow availability. I keep saying to people that we act like we are a very poor company. We don't exercise our strength by putting into the test our liquidity.

The next question comes from Vitalie Crestianov from Global Alpha Capital Management, and I quote, "Could you elaborate on your vision for the franchising business, specifically the scale and size you aim to achieve, the markets you see as most attractive? And how the economics work from Jumbo's perspective?"

I said and I keep repeating that this is just a plus business, which contributes to our overhead costs. That doesn't make sense to go beyond that because it is an operation which is not controlled by us. It is controlled by third parties in third countries where we have limited control. So for me, we have to balance our need for additional income, but at the same time, not at the expense of increasing our risk. The future of Jumbo is not through franchising. It is by generic growth in countries that we involve ourselves directly.

The next question comes from Maksim Nekrasov, and I quote, "Should we expect dividends in line with free cash flow going forward? Or you plan to increase cash balances going forward?"

In my -- in the back of my mind, I've said before and I repeat it all the time, we try to form a company that will last many, many years as we go forward. To do so, at the end of this exercise, we need to own the stores that we operate on. We need to keep having relative generic growth and at the same time, hold a lot of cash in our hands in order to sustain and foresee favorable -- unfavorable events if they come. So if one says, are we profit maximizers or profit satisfiers, the answer is that we are profit satisfiers. We want to run this company like a plane and not like a rocket. And this will not change as long as I'm running the company. We have been inspired by Japanese companies that have survived both World Wars very easily. And by studying them, we have found out that they were cash rich because if things go bad, money is a very important factor to stay alive. And we will not commit funds just to have, let's say, marginal improvements in our short-term performance.

The next question comes from Shipra Agarwal from Goldman Sachs Asset Management, and I quote, "Can you talk about competition from Chinese marketplaces in your markets? And what is your strategy to design your business?"

Our belief is that competition is a good thing because it awakens companies to do better and improve their productivity. So the more competition, the better, not the worst as long as companies are alive and they have not done mistakes -- strategic mistakes in the past. Jumbo has proven over the last 30 years or whatever that this is a parameter that we very strongly protect. And there may be unfair competition coming out of China on some aspects of our business like, let's say, companies like [Temu or Shein ] or whatever. But I'm sure that this has been detected both in the States and Europe.

And soon, there will be measures to counterbalance that and force them to compete at arm's length with the competition. We don't worry about competition, which is fair and in favor of the consumer. We only reject competition, which is unfair, that they take advantage of loopholes. But from my experience, sooner or later, these loopholes will close because if they don't close, then they may have an impact, but I don't believe that countries will stay idle to that.

The next webcast question comes from Constantinos Zouzoulas with Axia Ventures Group, and I quote, "First question, regarding franchisee business, is there any -- is there an optimal number of franchisee stores Jumbo can support on the current strategy?"

I would say less than more. Hopefully, we want our infrastructure to support our growth and not franchisees growth. But for us, it's a hedge because if for whatever reason, our growth is not as strong as we would have liked it, then we can ship more to the franchisees.

Second question, "Could you remind us the current route of products from China to Greece?"

What?

Could you remind us the current route of products from China to Greece?

The route, you mean?

Yes, yes, the route.

The Suez Canal has not opened for container ships. It may open today or tomorrow or in a month or in 1 year, it's anybody guess. But definitely, one day it'll open. As we see today, it is not such a big problem because there is overcapacity of ships serving a Spartan demand. And therefore, let's say, it helps everybody to relax a little bit. But I'm sure market conditions will change in the future. The Suez Canal would be given back to the ships -- to the world routes. And as a result of that, time spans would improve. On average, today, we have almost 50 days, but we have to wait for transport period from China to the Mediterranean, for example, as they have to go through Africa.

The next question comes from [indiscernible] with Taro Capital Management, and I quote, "Could you elaborate on Romanian VAT increase in gross margin impact? And from what you are saying, you are not transferring these costs to the end consumers, even though it -- this is, in fact, a consumption tax. What are the main factors that limit Jumbo's pricing power in Romania?"

All costs at some stage need to be passed to the consumer. Otherwise, the company would face problems. But as I said, retail is not a proactive business. It's a reactive business. The example I mentioned with the penguins. You don't jump first to balance your act. The later the better.

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Vakakis for any closing comments. Thank you.

If I want to make one general comment, I would say that we remain optimistic, but at the same time, very, very cautious not to have a cost out of this optimism. So although this sounds a little bit as too much of a political position, we have to find balance in this act. In my view, and if we talk about the very short term, which is the period up to December, a feeling we have is that as we are today on the 24th of September, we are a little better than what we were yesterday. But September 25 or 26 could be something different that we find out from the news. So we don't really want to sell the company or whatever.

I'm really getting a bit suspicious why we are the only company around that says the obvious, why all other companies don't see part of the risks currently circulating around? And by saying the truth is this a good thing or a bad thing? And I have always raised this philosophical question. And the answer is that the truth takes you longer and helps you really focus on your business than anything else.

So I want to finish today's presentation by saying that we don't have to say anything more than what we have said already and have published already. And there is no hidden element in what we are saying. But as a personal view, of course, I'm a pessimist myself, things are not as we have liked them to be irrelevant of the fact that for one more year, we may be proven wrong. I don't know if I'm confusing people, but this is how I feel and I have a platform to express it here that people should really be very careful, but not for us, for the world as it evolves. For us, we are as good as any. Thank you very much, and good afternoon.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling. Have a good afternoon.