Eroski S. Coop

Overview Key strengths Key risks Regional leader in the fragmented and highly competitive Spanish food retail market. Limited geographic diversification and declining national market share over the past 10 years due to disposals and financial restructuring. Strong EBITDA margin of about 10%, above the average of larger rated European food retailers. Significant minority leakages relating to subsidiaries Supratuc and Vegalsa and elevated interest expenses hamper cash flow generation and financial flexibility. High share of private labels (35% of sales in fiscal 2023), profitable franchises (42% of stores), and cooperative model contribute to client retention and profitability. Springing maturity of senior secured debt if the subordinated obligations are not refinanced by July 2027. EBITDA slightly contracted in the first half of

...Eroski S. Coop's EBITDA slightly contracted in the first half of 2024 amid a challenging operating environment, after a strong fiscal year 2023 (ending Jan. 31, 2024). Eroski reported gross sales of 2,607 million for the first half of fiscal 2024, a 3.2% increase from the same period in 2023. However, the company's adjusted EBITDA of 256 million for the same period was 4.0% lower than for first-half 2023, implying a dilution of about 80 basis points of adjusted EBITDA margin to 9.8%. This slight dilution follows a very strong fiscal year 2023, when the company outperformed our base-case expectations of revenue and EBITDA, which reached 530 million. We expect similar full-year EBITDA for fiscal 2024, as the second half of the year...

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