Discounter Action sees sales surge after store expansion

"With Action opening 62 new stores this year whilst also growing like for like at 9.8% the growth looks set to continue," he added. 3i said Action, which accounts for the majority of its investment portfolio, generated a gross investment return of 3.718 billion pounds, or 33%, in the financial year ended March 31.

European discount retailer Action delivered sales growth of 21% in the first quarter, the chain's private equity owner 3i said on Thursday, as the company expands its store network and attracts more people shopping on a budget. Action has been a beneficiary as inflation in Europe reduced consumers' spending power, driving them to trade down from more expensive supermarkets to find cheaper alternatives for everything from laundry detergent to dog treats.

Action stores sell branded food and household products, toys, kitchenware, DIY items and decorations, and it says two-thirds of its products cost less than 2 euros ($2.15). The retailer sources from stocklot traders, importers, manufacturers, and big consumer brands, and only one-third of its product offering is fixed - which it says draws shoppers in to "treasure hunt".

Action has stores in 12 European countries, having opened its first store in Portugal in February after adding 303 new stores overall last year. Its largest store network is in France, with Germany and the Netherlands also core markets. Action's net sales rose to 3.004 billion euros ($3.23 billion) in the first quarter from 2.485 billion a year earlier, and like-for-like sales grew by 9.8%.

Action's results were "outstanding", said Marcus Morris-Eyton, portfolio manager at AllianceBernstein, which invests in 3i. "With Action opening 62 new stores this year whilst also growing like for like at 9.8% the growth looks set to continue," he added.

3i said Action, which accounts for the majority of its investment portfolio, generated a gross investment return of 3.718 billion pounds, or 33%, in the financial year ended March 31. "Action's compelling growth story continues to be a major driver of the Group's return," 3i Chief Executive Simon Borrows said.

The private equity group, which invested in Action in 2011, increased its stake to 54.8% from 52.9% over the year. It has no plans to exit the business. ($1 = 0.9312 euros)

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