08 Jun 2026 05:19:11 ET
CITI’S TAKE
May-26 sales improved to +4% YoY (YTD +4%) vs. -4%YoY in April-26 as the previous month was affected by some seasonal sales shift to March. Jumbo flagged that geopolitical instability impact on consumer demand is becoming increasingly evident, and franchise/wholesale has slowed compared to 2025 reflecting high base and cautious approach to the timing of commercial decisions. Romanian sales have improved to -2% compared to -15%YoY in April (-6% YTD) despite macro pressures. Jumbo maintains its group FY26 outlook (c.5% sales growth and EUR310-320mn net profit / -3% to flat vs. 2025) but flagged that in case current conditions persist beyond 1H26 mgmt. may reassess its guidance, most likely together with 1H26 financials (late September). We had recently trimmed our estimates and TP: Mgmt. signals caution this year; TP Down to EUR25; Neutral.
Valuation
We derive our EUR 25 target price based on average of our P/E multiple-based valuation (where we assign ~10x 2026e P/E at a discount its 5-year average reflecting muted growth prospects compared to recent history) and DCF-based valuation (assuming WACC of 10%, and terminal rate of 2%). Our TP implies c.10.5x 2026e P/E.
Risks
Key upside risks to achieving our target price include:
(1) Stronger economic growth and consumer spend due to lower geopolitical risks in 2026, e.g. geopolitical de-escalation in Russia/Ukraine could bring energy priced down and support consumer spending in Europe.
(2) Action deciding not to expand in Balkans – in case Action decides not expand in Grece, Cyprus or Bulgaria, we see a possibility that LT margin of Jumbo could be sustained closer to current levels compared to ~6pp decline we currently assume in our DCF model.
(3) Strong EUR and better purchasing terms during 2025 supporting Jumbo’s margin above our expectations leading to materially higher earnings growth.
(4) Restarted Buyback program, which could provide ST support to shares.
Key downside risks to achieving our target price include:
(1) Weaker macro in Jumbo’s markets and primarily lower for longer growth in Romania.
(2) Faster pace of Action’s and ecommerce players expansion in Jumbo’s markets.
(3) Supply chain disruptions and tariffs on Chinese imports affecting Jumbo’s purchases.
If the impact on the company from any of these factors proves to be greater than we anticipate, the stock will likely have difficulty achieving our target price. Likewise, if any of these factors proves to have less of an effect than we anticipate, the stock could outperform our target.