The diverse range of stationery, toys and household articles makes the Greek retailer the leading discounter Southeast Europe. (Photo: Freepik)
Greece has remembered many from an economic perspective due to the state debt crisis. However, EU aid funds, a hard debt, restructuring and reforms led to Greece can reduce its debts annually with a positive budget balance. The country seems to have taken a solid growth path.
While Germany recorded a slight GDP decline by 0.1 percent in 2024, Greece was able to achieve a real GDP growth of 2.3 percent. The former crisis state of Europe also offers investment opportunities for investors that extend beyond national borders.
From toy dealer to the popular megastore
Jumbo Sa Started in 1986 by selling toys. The founder, Apostolos Vakakis, had previously sold his board game publisher to Hasbro before building a flourishing retail empire from a toy business for decades. Vakakis introduced the concept of large discount shops that offer a wide range of products. Today the Jumbo range includes toys, household items, stationery, seasonal goods as well as inexpensive consumption and use items.
In the 2000s, Jumbo opened branches with areas of around 9,000 square meters. In order to further capitalize for growth, Jumbo Sa went to the Athens stock exchange in 2005. The expansion to Cyprus, Bulgaria and Romania should follow. On the one hand, Jumbo developed with 86 branches in Southeast Europe, online stores and some franchise contracts in countries such as Albania, Bosnia, Montenegro and Israel.
Customer needs in focus
The founder attributes the success that he closely observed trends in developed markets. Through a deep understanding of customer needs, Vakakis Jumbo was able to lead to the head of the retail sector without making high investments in marketing. Instead, the call attracts low prices and a diverse offer. A rotating range of the season and targeted advertising campaigns also increase customer frequency and contribute to the growth of sales.
The 2 central pillars of the business model are the hyper-store model and the optimized, direct procurement strategy. The size of the branches enables goods to be obtained in large quantities and thereby reaching considerable quantity discounts. The costs for middlemen are saved by direct orders, mostly from China. These cost advantages are passed on to customers and at the same time enable higher margins and profits. Jumbo also recognizes the importance of sustainability and remains flexible in order to always operate customer needs.
Liquidity strong with franchise
While the company runs its own stores and online shops in the core markets in Greece, Cyprus, Bulgaria and Romania, the retail giant generates additional revenue in other markets with a franchise model. The franchise model enables sustainable expansion, without a great deal of capital and without watering down shareholders. From a financial point of view, Jumbo is therefore also convincing with high net finity and an increasing Free Cashflow.
High margins and stable growth
Due to the cost -efficient business model, Jumbo is constantly increasing margins with sales growth of an average of 7 percent per year. The gross margin increased from 51 percent in 2016 to 55 percent. The operational margin was increased from 25 percent to 33 percent. Despite the actually capital -intensive industry, Jumbo is characterized by a business model, which does not require any major investments in long -term physical assets (Capex). In 2024, a new record was reported to the Free Cashflow (22 percent). It should be noted that the free cash flow margin was never single-digit.
Evaluation and shareholder return
Jumbo is not only a successfully growing, profitable and start -up company, but also impresses with a fair evaluation. The Course-profit ratio (KGV) is currently only 11, although Jumbo’s course has increased by 11.5 percent per year in the past 10 years and the profit should continue to increase by 5 to 7 percent in the next few years. Another important key figure provides the Capital yield the. The Roic von Jumbo is 28 percent that are unparalleled in this industry. Shareholders benefit from strategically set share buyback plans and a dividend distribution of currently 3.7 percent.
Opportunities and risks
The opportunities result from an attractive assessment, excellent fundamental data and an impressive track record even in times of crisis. The risks lie in the dependence on Asian suppliers and possible trade conflicts. In addition, regulatory changes can burden the Jumbo margins.
Disclaimer:
No investment advice. No call to buy or sell securities.