Good afternoon, and welcome to the Q3 2026 financial results of Żabka Group. After the speakers' remarks, there will be a question and answer session. This webcast will be recorded and an archive of the webcast will be posted on the company website. By participating in the Zoom call, you are agreeing that recordings made during the event may be shared with Żabka Group.
For those of you who are joining us via Zoom, if you wish to ask a question during the Q&A, we ask that you please use the raise hand function at the bottom of your Zoom screen, or if you have dialed in, please press star nine. If you already have a question, please do this now. Once it is your turn, the moderator will introduce you. Please then unmute yourself and ask your question. I would now like to hand the call over to Filip Paszke.
Thank you very much. Good morning or good afternoon, and welcome to our Q3 2026 earnings call. My name is Filip Paszke. I am the director responsible for corporate development and investor relations. We have about a 20-minute presentation followed by a Q&A session. I would now like to hand over to Mr. Tomasz Suchański, CEO and Chairman of the Board of the Żabka Group.
Thank you, Filip. Good morning or good afternoon, everyone, and thank you for joining us. I am joined today by Marta Wrochna-Łastowska, our CFO, and Tomasz Blicharski, our Chief Strategy and Development Officer and my successor in the role of the CEO.
I will now start with the key highlights from the third quarter. Żabka again delivered consistent growth and improved profitability. Sales to end customers reached PLN 9.6 billion , up 12.3% year-on-year. Like-for-like growth was 3.5%, below what we reported in the previous quarter, but still ahead of the broader market.
We continue to expand the network. At the end of September, we operated 13,405 stores across Poland and Romania, with 1,410 gross openings over the last 12 months. Profitability continued to improve. Adjusted EBITDA increased to nearly PLN 1.5 billion , up 16.5% year-on-year, while the Adjusted EBITDA margin rose by 0.6 percentage point to 15.6%.
Our balance sheet also remains strong. Net debt to adjusted EBITDA stood at 0.7x , improving by 0.4x year-on-year. These results reflect continued progress across the business. We are expanding the network, growing ahead of the market and improving profitability, while maintaining strong cash generation and disciplined approach to costs. Tomasz will now take you through the market environment and our strategic execution in more detail.
Thank you, Tomasz, and hello, everyone. It's a pleasure to meet you again. The market environment was more difficult in the third quarter. We observed rather subdued grocery spend. Inflation increased moderately, partly due to the higher fuel prices. At the same time, real wages continued to grow. However, the growth stalled and is at the lowest rate in a number of quarters.
This growth, however, still supported household purchasing power. But as you can see at the top chart here on the slide, the inflation lately has been outpacing the wage growth. Customer confidence remained relatively resilient, although consumers continued to be selective in their spending.
This is also visible in the retail data. Total retail sales grew by 3.3% in September, while growth in food, beverages, and tobacco was only 1.4%. This confirms that the environment for food retail is somewhat subdued.
Against this backdrop, Żabka continued to outperform and gain market share. On a rolling 12-month basis, our share increased from 10.4% a year ago to 11.3% at the end of September. So while external conditions provided limited support, our relative performance remained strong. We continued to grow ahead of the market, supported by network expansion and the performance of our strategic categories.
Moving to our strategic pillars, we continued to make progress across each of them. On expansion, we remained on track with our upgraded ambition. Over the last 12 months, we opened 1,224 stores in Poland and 186 in Romania. This brought the total network to 13,405 stores and strengthened our footprint across both markets. On like-for-like, we want to be ever closer to the customer and increase the lifetime value, as well as drive loyalty and increase engagement.
Therefore, we are launching initiatives aiming to use the data to engage customers in a more targeted way. Our so-called customer growth loop connects insights from the Żabka app, retail media, and stores. This allows us to identify specific customer groups, reach them with personalized communication, and measure the impact against the control group. Alongside our core business, New Growth Engines also continued to expand their reach as we continued to test and develop new growth initiatives that strengthen customer engagement and broader customer access to our ecosystem.
During the quarter, this included the further development of Triki, the expansion of Jush and delio into Katowice metropolitan area, and the continued rollout of our vending network, which reached 275 machines and generated almost 1,000,000 transactions one year after launch. And with that, I will hand over to Marta, who will take you through the financial performance in more detail.
Thank you.
Thank you, Tomasz, and hello again, everyone. I will start with the key financial highlights for the third quarter. Sales to end customers reached PLN 9.6 billion , up 12.3% year-on-year. Growth was supported by continued network expansion, solid performance from newly opened stores, as well as like-for-like growth of 3.5%.
We opened 365 stores in Poland and Romania during the quarter, bringing the total network to 13,405 locations, as Tomasz mentioned. With 1,410 gross openings over the last 12 months, we remain on track to deliver our full-year expansion ambition.
Profitability improved further. Adjusted EBITDA reached almost PLN 1.5 billion , up 16.5% year-on-year. Margin increased by 0.6 percentage points to 15.6%, and it was supported by operating leverage, continued efficiency improvements, and disciplined cost management.
Adjusted net profit increased by 13.2% to PLN 572 million . This predominantly reflects stronger operating performance of our business in the third quarter. Cash generation also remained strong. Free cash flow reached PLN 736 million, while net debt to adjusted EBITDA stood at 0.7x at the end of September. The third quarter therefore brought continued double-digit sales growth, further margin progression, and robust cash generation, despite a subdued market environment.
Three points are worth discussing when talking about our key financial metrics. First, gross profit increased by 17.3% in the quarter, with the margin improving by 0.8 percentage point. This was supported by positive category mix, better terms of trade, and continued efficiency improvements. Second, adjusted EBITDA grew by 16.5% and the margin increased to 15.6%, up 56 basis points.
On the year-to-date basis, the margin reached 13%, reflecting operating leverage and strong performance in our core Polish business. We are firmly on track to deliver our full-year guidance in terms of profitability. Franchisee margin increased to 16.7% of sales to end customer in the quarter and 17.3% year- to- date.
As we have highlighted before, this metric should be addressed over a longer period, given the phasing between quarters. The year-to-date increase reflects our continued investment in relationship with our franchisees.
Finally, net profit increased by 13.2% in the quarter. For the first nine months of 2026, it grew by 36.6%, with the margin improving by 60 basis points to 3.4%. This was supported by stronger operating performance and lower financing costs. Those costs fell in line with the trend observed throughout the year, but the dynamic was affected by the fact that in the third quarter 2025, as you may recall, we recognized an incremental gain on loan modification under IFRS, reflecting the improved margin on the refinanced facilities.
The EBITDA bridge shows continued margin expansion driven by top-line growth and stronger profitability in Poland. We continue to demonstrate strong discipline in driving operating efficiency. Our store costs and logistics costs fell year-on-year as a percentage of sales. We have also seen improved efficiency in our support functions.
This allows us to keep the costs flat as we scale our business at a rapid pace, and at the same time to reinvest in growing our presence in Romania, visible within the New Growth Engines. Our adjustment reached PLN 51 million in the third quarter, mostly related to non-cash long-term incentive plan costs. In the end, both EBITDA as well as EBITDA margin increased significantly year-on-year.
On cash flow, we continue to convert operating performance into strong cash flow generation while funding the growth of the business. Free cash flow reached PLN 736 million in the third quarter, up 15% year-on-year, while conversion remained above 60%. For the first nine months, the free cash flow increased to almost PLN 2 billion . CapEx increased as we continue to invest in the network expansion, including the accelerated rollout of our stores in Romania.
Working capital reflected the usual seasonal outflow after the summer peak, with the year-to-date movement mainly related to the timing of inventory purchases and the cash settlements. Strong cash generation continued to translate into further balance sheet strengthening.
The net leverage was at 0.7 x at the end of September, flat from the end of second quarter, following the dividend payment of PLN 530 million in July this year. This represents an improvement of 0.4 x on year-on-year basis. Given our strong liquidity position, we also made an additional PLN 400 million of repayment under the current SFA facility. This leaves us with a strong balance sheet and continued financial flexibility to invest in the growth of our business.
To conclude, let me reaffirm our midterm expectations. We continue to target over 1,300 new stores opening in 2026 and 1,300+ openings per year in the medium term across Poland and Romania. For like-for-like sales, we continue to expect mid to high single-digit growth for the midterm, with current trends suggesting an outcome in the lower end of the range this year.
On profitability, we expect Adjusted EBITDA margin to remain stable at the top end of 12%, 13% range and o n the bottom line, we continue to expect a gradual improvement in adjusted net income margin towards around 4.5% in the medium term. I will now pass on to Tomasz for his concluding remarks.
Yes. Thank you, Marta. Ladies and gentlemen, as you all know, this has been my final results call as CEO of Żabka Group. I would like to thank you all for the discussions, questions, and support over the years. I am proud what we have achieved together, and I am confident that Żabka is ready for the next chapter. With that, we are now ready for your questions.
Thank you. If you wish to ask a question, we ask that you please use the raise hand function at the bottom of your Zoom screen, or if you have dialed in, please press star nine. We will pause for just a moment to allow any questioners to enter the queue. Okay, well, it appears we do not have any questions today, so that concludes today's call.
No, I believe, sorry, operator. I believe we have a question. We can see the question on screen at least, right?
Okay. We will hand back to you for the written questions. Thank you.
Yeah. We have got a question from Michał Majerski, Pure Alpha Investments. Do you consider raising number of openings target for 2026?
Yeah, we have, I think, disclosed the pace of expansion and our target is to open more than 1,300 stores for this year and we are confident we will meet the target as described and as confirmed during today's session.
Okay. As a reminder, if you have joined by Zoom, you can use the raise your hand function at the bottom of your Zoom screen, or if you have dialed in, please press star nine. Okay. I do not see any question. Oh, I see questions coming in now. We have a question from Jakub Krawczyk with Oddo BHF. Please unmute and ask your question. Jakub, your line is unmuted. Please go ahead and ask your question. Okay, we are not getting any audio, so I am going to move on to Richard Trainor with Bernstein. Please unmute your line and ask your question.
Hello, can you hear me?
Yep.
Fantastic. My first question is about the higher margins. I was wondering, have you seen an impact in margins from fuel costs yet, or is that still to come?
Yeah. We have seen some, but for us it is not the major driver for our results. We were able to fully offset those negative impact with other efficiencies, as you have seen within our results.
Fantastic. Thank you. My second and last question, I'm just trying to understand whether the deflation in the wider grocery market has had any impact on your like-for-like growth. It sounds like you think that the main reason for lower like-for-like growth was about weather and footfall. If that's right, has Żabka become more expensive relative to supermarkets, and if so, is that impacting customer behavior?
Yeah, we're not playing in exactly the same sector as supermarkets. The missions that we serve are different. They are impulse missions and only 30% of products overlap with discounters, for example. On some of these products, such as tobacco, the prices are regulated within these 30%.
Therefore, this is not directly comparable. What we have seen though, over the summer period is a mix of a few factors that you have raised. But we see that generally speaking, the market is somewhat subdued in terms of the growth. The Nielsen data show the market growing at around 1%, but it doesn't reflect, as you have described on footfall. It's more like a mix of different things.
Having said that, if you look at our trends over the last few quarters, generally, the like-for-likes that we have seen in the Q3 are in line with prior quarters.
That is great. Thank you very much. Tomasz, thank you for your kind comments about us analysts, and congratulations and good luck with the next step.
Thank you.
Thank you, Richard. Our next question will come from Volodymyr Shkuropat with Kepler Cheuvreux. Please unmute your line and go ahead.
Yes. Hi. I have two questions. I will go one by one. My first question is about the consumer demand, just to follow up. As you mentioned, there is a subdued food-related demand currently. Where did you see this in your own stores? Was it more in how often customers visit, how many items they buy, or in specific categories?
Certainly, I mentioned that the overall growth, I think, was recorded by our statistical office at a little bit more than 1%. Nielsen had it at 1% as well. Historically, Nielsen data was somewhat higher. Now, if you look at what is working very well with us, certainly, which we continue to develop.
We are very strong on the daily ready meals, so lunchbox type of offer, where we sell up to 1 million per day on our promotional day. There are categories which are kind of weather-related, and that's kind of dependent on the weather. The summer weather wasn't very stable this year. But generally speaking, there isn't one particular area where you could point it down and say that that was certainly performing much worse than the others.
Okay. On the like-for-like guidance, which you cut to mid-single digit now, my estimates point around 5% in the fourth quarter in order to reach 4% for the full year. Do you see any acceleration of like-for-like in October so far? I think the weather is warmer, so this should support.
I think we're confident we'll reach the 4% for the year.
Okay. Clear. My last question is about suppliers. As fuel, transport, and production costs are higher now, are suppliers already asking for higher prices because of that? If not, have they mentioned possible increases later this year or from 2027?
We typically have annual contracts with the suppliers, actually all of them, pretty much. We have just entered the renegotiation process for the next year, and it is too early to say exactly where things will settle. But we have things under control.
Okay. That is clear. Thanks.
Thank you. Our next question will come from Janusz Pięta with mBank. Please unmute your line and go ahead. Janusz, your line is now open. Please go ahead and ask your question. Okay, we will move on to Michał Potyra. Please unmute your line and go ahead.
Hi. Good morning. Can you hear me?
Yes. Now we cannot hear you.
Okay, I have unmuted myself. I think it works now. Can you hear me now, please?
Yes.
Yes. Sorry about that. Maybe if you could break down the like-for-like sales for us between volume and pricing. That is the first question. The second is on the gross margin. If you could maybe comment what were the key drivers of this pretty substantial gross margin expansion. And a third one is perhaps you could comment a little bit more on the competitive environment, especially around pricing. Thank you.
Maybe I will start with the margin. I think that you have seen the margin expansion for the last nine months. From the beginning of the year, we were able to increase the margin. There are many different reasons for that. First of all, as you know, we increased the scales of our operations, and it gives us an opportunity to receive better terms of trade from our suppliers so e ffects of scales is working for us positively.
We also improved a lot in terms of logistics operation, the processes, which helped us to decrease logistics costs as a percentage of sales in the last quarter, in the third quarter of 2026. We also use technology data to drive pricing and promo. Also, we use our app to increase the efficiency of our promotions. It helps us also to build the margin.
Finally, we were also able to decrease the consumption of energy per our stores on our main operations. Given that, it impacts also positively the store costs, which decreased as a percentage of sales as well. Also, it improved some processes of the headquarter. Given that the support functions costs as a percentage of sales, they went down as well. I would say that there are many different components which support the margin expansion visible from the beginning of this year.
Yeah, in terms of competitive dynamics, we don't have a direct competition per se, right? We're the leaders in modern convenience space in Poland, but obviously we compete for the wallet. Even though the missions of the consumers are different and the products that we sell in our stores are kind of largely differentiated, right? Only 30% of products, as I mentioned, overlap with the discounters.
There hasn't been much change in the competitive environment in the summer. Still in the discount sector, there is fierce competition between the discounters and the supermarkets and hypermarkets, but that is impacting mostly that part of the market. In terms of the like-for-like decomposition, I think we never shared details on this, but what I can say is that it is similar to what we have seen in the prior quarters.
Thank you.
Thank you. We'll return to Jakub Krawczyk with Oddo BHF. If you could unmute your line and go ahead. Thank you. Jakub, you may have to switch the audio source of your microphone. We'll come back to you again shortly.
Can you hear me now?
Oh, we can hear you now, perfect. Thank you.
There's so many options in this program. Okay, sorry. I just wanted to build on this gross margin question. That's one I had, actually. How do you forecast the gross margin trend going forward? I mean, obviously, you mentioned a laundry list of important initiatives, which I think had a very nice effect. How many of these are still, were these the low-hanging fruits or is there still stuff you can work on, or has most of the effect already been now recorded? Of course the scale thing will keep working, right? I guess we can expect still some upward trend?
I think that, as you mentioned, increasing the scale of the business usually the company benefits from that, and we can do that as you have seen. What I can say are that we are certain that we will deliver the guidance in terms of the profitability. We don't expect any different trends in terms of the fourth quarter compared to what you have seen in the year-to-date data.
Okay, thank you. I was thinking about the future years. 2027, for example. Is that something we can still expect some minor increase or?
I think we're still believing in our guidance that we gave some time ago, and we always have, especially given that we're living in a relatively volatile global and macro environment, let's call it this way. There is a lot of uncertainties and I think we gave a balanced guidance two years ago when we did the IPO, and we reiterated it a year ago, and we're following that guidance and I think there is no reason for us to change it, at least from where we sit now.
Thank you. If I could just ask one more on the like-for-likes. How much of a positive effect would you say is this QMS? How much of a premium to the broader market is related to your differentiating offering, including QMS?
Certainly this is one of the fastest growing and one of the biggest contributing categories in our offer. But it is difficult to understand fully what other players have in their mix and what they do in certain areas. So I think what I can only say is that for us, we see benefits of investing and it is an important differentiating factor for us, a reason for many customers to visit our stores, and we will continue investing in this for years to come.
Okay. Thank you very much, Tomasz. Thank you.
Thank you. Our next question will come from [uncertain] with Generali Pension Fund. Please unmute your line and go ahead.
Good morning.
Good morning. Hi.
Good morning, [uncertain]
I have a question about expansion. Romania seems to be on track. Balance sheet is pretty strong. Do you consider adding new geographies in 2027 or maybe 2028?
That's a great question. As you know, we're in the process with Couche-Tard and certainly our strategy, should that process be successful, which we have all the reasons to believe it will be, will be under discussion with them.
Thank you.
Thank you. Our next question will come from Janusz Pięta with mBank. Please unmute your line and go ahead. Janusz, your line is now open. Please go ahead. Okay, we will come back to you in just a moment. We will move on now to Volodymyr Shkuropat from Kepler Cheuvreux. Please unmute your line and go ahead.
Yes. Hi again. Sorry, one more question on the gross margin. I think part of this improvement was supported by higher inventory being sold to franchisees, which are part of your revenue, but not part of your sales to end customers. I am just wondering, what was the reason for this higher store inventory change in the third quarter compared to last year, but also compared to the second quarter?
Last year, you saw there was a decline quarter-on-quarter in the store inventory change, but this time we have an increase. I recall that in the first quarter you had a restocking before Easter, and this was the reason for higher inventory sold to franchisees. But what happened in 3Q?
Yeah. Thank you for this question. As we discussed, I think the best way to look at the inventory change is to look for the longer period of time. There may be some movements between the quarters or months, depending on calendar and many other promotional activities, the marketing agenda, and many different things.
The best way is to look from the longer-term perspective and assume, as we discussed previously, the store inventory change depends on or is driven also by the inflation, which is positive for us this year, and also the new stores opening. The drivers in this quarter were very similar, the same as we have seen historically. I would say the usual trends observed in the year-to-date period.
Okay. Thank you.
Thank you. Just one more opportunity, if you would like to ask a question, you can use the raise hand function at the bottom of your Zoom screen, or if you have dialed in, please press star nine. We will just pause for a moment to see if there are any final questions. Okay, that concludes today's call. Thank you everyone for joining. You may now disconnect.