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Jeronimo Martins Plans Low Prices in Poland Amid Competition

Jeronimo Martins SGPS SA is committed to low prices at its Biedronka supermarkets in Poland, Chief Executive Officer Pedro Soares dos Santos said, after strong competition prompted the retailer to say its profit margin would continue narrowing.

“There are two things which are part of Biedronka’s DNA that can never be put into question: the maintenance of the price leadership in the market” and greater proximity to clients, Soares dos Santos said in an e-mailed response to questions yesterday. Jeronimo Martins will provide more details about its plans for Biedronka to investors in November, he said.

Jeronimo Martins expects strong competition to “impact profitability for the year,” it said July 29 as it reported second-quarter earnings. Net income at Portugal’s biggest publicly traded retailer fell 8 percent to 83 million euros, missing the 87.9 million-euro average estimate of analysts surveyed by Bloomberg.

The stock declined 3.9 percent to 9.71 euros at 3:19 p.m. in Lisbon, taking its two-day decline to about 17 percent. The shares are at their lowest price in almost four years.

Earnings before interest, taxes, depreciation and amortization were 5.6 percent of revenue in the first half, compared with 6.2 percent a year earlier, the company said. The full-year change in Ebitda margin will be “broadly in line” with the first-half trend, it said.

While Jeronimo Martins is focused on “organically” expanding operations in Portugal, Poland and Colombia, where it began a new supermarket chain, Ara, it will remain alert to any acquisition opportunities, said Soares dos Santos.

Jeronimo Martins plans to open 50 stores in Colombia this year, he said. Expansion plans for the Biedronka chain remain on track and the company is maintaining a target of reaching 3,000 stores in Poland by the end of 2015, said Soares dos Santos. It had 2,473 at the end of June.

To contact the reporter on this story: Henrique Almeida in Lisbon at halmeida5@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net Jim Silver, David Risser

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