Turkish Food Retailers: HSBC Report

A rise in global inflation could pressure margins: The Middle East conflict could add to global inflation, potentially creating margin pressure in 2026 across Turkish food retailers and staples. Global food prices have been broadly stable over the past three years, and there are currently no major disruptions to key commodity supply chains or production.

However, second-order effects may emerge through higher fuel prices (raising logistics costs) and tighter urea and ammonia supply (increasing fertiliser costs). These pressures are likely to feed into food prices over time, though the near-term impact is limited by existing
inventories and crop cycles. Packaged food and beverages may also face higher packaging costs driven by oil and aluminium. In our view, continued market share gains by organised retailers (1.4ppts in 2025) support the volume growth outlook, providing an offset for some of the cost impacts.

Wage inflation-related risks appear manageable: Wage inflation was a major headwind for food retailers in 1H25, but eased meaningfully in 2H25, keeping employee costs as a share of sales broadly stable for 2025. At 27% minimum wage growth and flat headcount, we estimate a c40–50bp EBITDA margin uplift in 2026. Our analysis suggests that, with slower store expansion and rising logistics investment, retailers should be able to absorb c5% headcount growth (in line with the 2025 average) without margin dilution. Key downside risks include mid-year wage adjustments if inflation re-accelerates (depending on the global developments), and Migros’ union negotiations, which could drive wage growth above the minimum wage. We pencil in a flattish comparable EBITDA margin for Migros (offsetting factors at play), a 40bp improvement for Sok (2H25 recovery), but a 20bp decline for BIM (gross margin normalisation) for 2026e.

Maintain Buy on all three: We consider BIM to be a resilient name in the Turkish consumer sector and have a positive view on the growing scale of FILE operations. Migros is an all-inclusive grocer in Türkiye, with presence across all consumer segments and a future-ready platform. Both companies offer upside potential to their valuations from their successful subsidiaries (i.e., supermarket File for BIM and online operations for Migros) over the next few years.

Our Buy thesis on Sok is driven by the growing share of Sok 2.0 and the scope for cash flow recovery during 2026.

Source: HSBC Global Research