Rewe is undeterred by the difficult overall economic environment: the retail and tourism group has announced that it plans to invest 16 billion euros between 2024 and 2028. The money has been budgeted exclusively for organic growth. „Acquisitions would come on top. But you can't plan them,“ CEO Lionel Souque told Börsen-Zeitung.

Last year alone, the Cologne-based company invested 2.8 (previous year: 3) billion euros in property, plant and equipment and intangible assets.

Souque is convinced that in order to remain successful in the future – for 2024, Rewe is forecasting group sales growth of 4.6% to 88 billion euros and an increase in operating profit of almost 9% to 2 billion euros – investment must be made in „important areas such as technology, infrastructure, logistics and the modernisation of stores“.

One focus is on property, which will receive around a third of the investment budget each year. „We try to acquire the good existing properties, but also tackle new project developments, particularly in accordance with the Green Building Standard,“ explains CFO Telerik Shishmanov. A lot of money is also being invested in warehouse infrastructure. „A three-digit million amount is quickly due for a large warehouse,“ he says.

The CFO is not worried that the operating cash flow is not sufficient to finance the investment projects: „If you invest over 1 billion euros in property every year and the financing requirement only increases by 100 to 300 million euros at the same time, I am pretty relaxed," he says. Financially, the group is well positioned for further growth. It is true that the reported net debt of 17.1 billion euros with equity of around 11 billion euros is quite substantial. However, it should be noted that the majority is accounted for by leasing liabilities. Rewe puts its interest-bearing financial debt at 3.8 billion euros.

In terms of lease liabilities, Rewe is on a par with its competitors in an international comparison. „Especially in times of high inflation, ownership helps to avoid rent indexation. But it also gives us more flexibility when it comes to remodelling,“ explains Shishmanov. The most important sources of financing are a syndicated credit line with a volume of 2.5 billion euros, and a 900 million euro bond that is linked to sustainability targets. „I assume that we will continue to utilise this market in the future,“ says Shishmanov. However, the CFO leaves it open as to whether it will once again be a „green“ financing instrument. „It's definitely the case that investors no longer attach so much importance to sustainability aspects,“ admits Shishmanov, but at the same time emphasises that "we want to continue working on our sustainability goals.’

The switch from Payback to its own Rewe customer loyalty programme has reportedly exceeded „all expectations“. Nevertheless, it also involves high start-up costs. A three-digit million sum is being invested. Thus though turnover will increase this year, profits will be lower. It is still not possible to estimate how quickly this will pay off. For the Rewe boss, however, there is no question that customer data can be utilised to generate value through the use of artificial intelligence. „Payback is not enough for a large retailer,“ says Souque. The place in the Payback bonus programme vacated by Rewe has been taken over by Edeka.