J.P. Morgan launched a European food retail FX tracker, warning against mistaking mechanical FX tailwinds for fundamental improvement

Overview

This report is the inaugural edition of J.P. Morgan's newly launched European food retail FX tracker, designed to track the covered companies' FX exposure in financial statements, company-disclosed sensitivities, J.P. Morgan's estimated target-price impact, and the market correlation between share prices and major exchange rates. The report points out that as macro volatility rises, FX is again becoming an important variable affecting earnings, balance sheets, and factor performance.

Core views

The core views are: first, Jeronimo Martins, Ahold Delhaize, and Carrefour have the most significant FX exposure in the coverage universe; second, FX fluctuations have the largest impact on J.P. Morgan's implied target price for Jeronimo Martins; third, Carrefour's share price is highly correlated with BRL/EUR, but this tailwind should not be directly equated with improvement in Brazil operating fundamentals; fourth, Ahold Delhaize is clearly affected by USD/EUR translation, but the market is more focused on its defensive fundamentals and cash returns; fifth, domestically oriented retailers such as Colruyt, Domino's Pizza Group, and Greggs have lower FX exposure.

Analysis framework

The report uses a combination of top-down and company-level analysis: it first identifies currency exposure in revenue, EBIT, debt, net assets, financing, and hedging, and then combines this with company-disclosed sensitivity analysis, J.P. Morgan's estimates of FX impact on target prices, and historical correlations between share prices and exchange rates such as BRL/EUR, USD/EUR, and EUR/PLN.

Methodology notes

• FX risk breakdownDistinction between translation risk and transaction risk

  translation versus transaction impact

  The report distinguishes between the impact on revenue, EBIT, and EPS from translating foreign-currency businesses into the group reporting currency, and the real transactional impact arising from procurement, payables, debt, and hedging.

• Sensitivity analysisCompany-disclosed sensitivities and J.P. Morgan target-price estimates

  FX sensitivity analysis

  The report combines company-disclosed FX sensitivities with J.P. Morgan's estimated implied changes in target prices to compare different companies' vulnerability to FX fluctuations.

• Market correlationFive-year observation of share price and FX correlations

  share price versus FX correlation

  The report compares historical share-price trends with exchange rates such as BRL/EUR and USD/EUR to assess whether the market uses particular currencies as proxy variables for company fundamentals or macro risk.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jeronimo Martins (JMT.LS)

  Highly sensitive to PLN and COP; the report believes FX fluctuations have the greatest impact on its target price.

  Strengths

  Its large contribution from the Poland business means that if local currency and operating trends are favorable, earnings translation and market sentiment can show significant elasticity.

  Weaknesses

  About 70% of revenue and about 85% of EBIT are exposed to PLN, while debt is heavily exposed to COP and PLN, making equity and earnings clearly affected by FX fluctuations.

  Comparison

  Compared with other covered companies, Jeronimo Martins has more concentrated and larger FX exposure in revenue, EBIT, and debt.

  Risks

  Adverse moves in PLN or COP, revaluation of non-euro debt, and mismatches between operating currencies and reporting currency.

• Koninklijke Ahold Delhaize NV (AD.AS)

  Mainly affected by USD/EUR, with the U.S. business accounting for about 60%-65% of revenue and EBIT.

  Strengths

  Defensive fundamentals and stable cash returns mean its share price is not entirely driven by short-term USD/EUR moves.

  Weaknesses

  Dollar translation directly affects euro-reported net sales, operating profit, and EPS, while volumes and margins in the U.S. business may still remain under pressure.

  Comparison

  Translation FX exposure is high, but share-price correlation is not as strong as Carrefour's correlation with BRL/EUR.

  Risks

  Adverse USD/EUR moves, contraction in U.S. business volumes and margins, and exchange-rate assumptions in company guidance proving inaccurate.

• Carrefour (CARR.PA)

  Its share price is often highly correlated with BRL/EUR, and Brazil contributes about 33% of group EBIT.

  Strengths

  Improvement in BRL, lower SELIC, and a re-rating of IBOV may support the share price and valuation.

  Weaknesses

  Competition in Brazil Cash & Carry remains structurally intense, which may limit room for improvement in volumes and margins.

  Comparison

  Compared with Ahold Delhaize, Carrefour's share price is more likely to treat BRL as a proxy for Brazil macro risk.

  Risks

  BRL depreciation, IAS 29 hyperinflation accounting effects in Argentina, and Brazil business fundamentals failing to improve alongside FX.

• B&M (BMEB.L)

  Limited FX exposure, mainly from procurement in USD and EUR while reporting in GBP.

  Strengths

  Revenue is geographically concentrated in the UK and France, structural multi-currency operating exposure is low, and forward FX contracts are used to smooth procurement costs.

  Weaknesses

  Gross margin may be affected by dollar procurement costs and hedge-accounting effects.

  Comparison

  Lower translation and financing FX risk than large multinational retailers.

  Risks

  A weaker GBP raises import costs, hedge gains fade, and procurement currencies fluctuate.

• Colruyt (COLR.BR)

  Low FX risk, mainly transactional risk from procurement and a small amount of non-euro positions.

  Strengths

  Core operations are concentrated in Belgium and nearby European markets, and financial debt is mainly euro-denominated.

  Weaknesses

  Some imports, supplier contracts, and non-euro subsidiaries still create transactional or translation risk.

  Comparison

  Clearly lower than Jeronimo Martins, Ahold Delhaize, and Carrefour.

  Risks

  Volatility in EUR/INR, EUR/RON, and USD/EUR positions, and translation effects on revenue and costs of non-euro subsidiaries.

• Domino's Pizza Group PLC (DOM.L)

  Moderate FX exposure, with main operations in the UK and Ireland.

  Strengths

  Most operating cash flow comes from GBP and EUR, with no significant non-sterling debt exposure observed.

  Weaknesses

  It may still be affected by EUR-related operating cash flows and procurement costs.

  Comparison

  FX risk is lower than companies with pan-European or Latin American exposure.

  Risks

  GBP/EUR fluctuations and changes in import or supply-chain costs.

• Greggs (GRG.L)

  Low FX risk; the report says there are no recurring material foreign-currency transactions.

  Strengths

  Operations are highly localized, and no foreign-currency debt exposure has been disclosed.

  Weaknesses

  Occasional capital equipment purchases may be denominated in foreign currencies.

  Comparison

  It belongs to the group with the lowest FX exposure among covered companies.

  Risks

  Fluctuations in sporadic foreign-currency procurement costs.

• Sainsbury (SBRY.L)

  Core revenue and costs are in GBP, with FX risk mainly coming from payables to EUR and USD suppliers.

  Strengths

  It has no large overseas operating divisions, so translation risk is limited.

  Weaknesses

  Payments to overseas suppliers expose procurement costs to GBP fluctuations against EUR and USD.

  Comparison

  FX risk is higher than Greggs but lower than Jeronimo Martins, Ahold Delhaize, and Carrefour.

  Risks

  A weaker GBP, rising USD and EUR import costs, and fluctuations in cash-flow hedge reserves.

• Tesco (TSCO.L)

  Uses GBP as functional and reporting currency, but has operations in Ireland and Central Europe and small debt exposure in EUR and USD.

  Strengths

  It uses cross-currency swaps and FX derivatives to manage residual FX risk, leaving limited major mismatches.

  Weaknesses

  Its Ireland and Central Europe businesses still create some EUR, CZK, and HUF translation risk.

  Comparison

  Overseas business exposure is higher than purely UK domestic companies, but hedging and local cash-flow financing reduce mismatches.

  Risks

  Volatility in EUR, CZK, HUF, and USD, as well as changes in hedging efficiency and interest-rate and inflation curves.

Key data

• Largest foreign-currency revenue exposureJeronimo Martins PLN about 70%; Ahold Delhaize USD about 60%; Carrefour BRL about 20%Key conclusion on page 1 of the report.
• Largest foreign-currency EBIT exposureJeronimo Martins about 85%; Ahold Delhaize about 65%; Carrefour at least 30%On the same basis, Jeronimo Martins and Ahold Delhaize have the highest operating-profit translation sensitivity.
• Jeronimo Martins debt currency exposureCOP about 60%; PLN about 25%The report says it has significant non-euro debt exposure.
• Carrefour Brazil EBIT contributionAbout 33%BRL affects both profit translation and is used by the market as a proxy for Brazil macro risk.
• Ahold Delhaize U.S. business exposureRevenue and EBIT about 60%-65%Changes in USD/EUR directly affect euro-reported sales, operating profit, and EPS.
• Ahold Delhaize net debtMore than €15bnIts capital structure is mostly in euros, but about 20% of loans and credit facilities have USD exposure.
• Jeronimo Martins 10% FX sensitivityA 10% depreciation of PLN has a positive impact of €535m on the equity currency translation reserve; a 10% depreciation of COP has a positive impact of €182m; total negative impact on equity is €195mBased on net balance-sheet positions as of 2025-12-31.
• Report pricing dateClosing price on 2026-07-27Company price and rating disclosures are based on the closing price of that date unless otherwise stated.

Impact & implications

The implication for investors is that when analyzing European food retail stocks, they should separate FX translation, procurement costs, debt currency, hedging, and macro proxy trading. FX improvement may lift EPS, share prices, or valuation multiples in the short term, but if sales, margins, competitive dynamics, and cash returns do not improve simultaneously, the investment conclusion should not be simply upgraded.

Risks

• Mistaking mechanical EPS tailwinds from FX and interest rates for improvements in sales, margins, or competitive positioning.
• Fluctuations in BRL, PLN, COP, USD, EUR, and GBP may alter revenue, EBIT, EPS, equity reserves, and debt revaluation.
• Accounting treatment in hyperinflationary economies may amplify the negative impact of Argentina operations on Carrefour's euro-reported statements.
• Transactional FX risk on the procurement side may affect UK retailers through costs and gross margins.
• Hedging tools can smooth volatility, but they can also cause reported earnings to be affected by hedge accounting and changes in cash-flow hedge reserves.

What to watch

• J.P. Morgan's subsequent quarterly FX tracker updates, as well as interim updates during periods of large FX volatility.
• The impact of USD/EUR on Ahold Delhaize's euro-reported EPS and the achievability of company guidance.
• The impact of BRL/EUR, SELIC, and IBOV trends on Carrefour's share price, valuation, and expectations for its Brazil business.
• The impact of EUR/PLN and COP/EUR on Jeronimo Martins' target price, equity reserves, and debt revaluation.
• GBP moves against USD and EUR for UK retailers, as well as changes in imported procurement costs and hedging gains.
• Whether company-disclosed sensitivities in revenue, EBIT, net debt, hedging, and cash flow continue to align with market correlations.