3i Group sees softer Q3 at Action, expands stake amid market challenges

Investing.com -- 3i Group PLC (LON:III) reported softer like-for-like (LFL) sales growth at Action in the third quarter of 2025, citing a weaker consumer backdrop in France and Germany and unrest in France as key drivers, sending shares down on Thursday. 

The company also announced a deal to increase its stake in the retailer through a share transaction.

In a portfolio update ahead of its Capital Markets Seminar, 3i said year-to-date sales at Action reached €10.9 billion as of September 21, below its expectation of €11.2 billion for the first nine months. 

This represents an 18% increase year-on-year, slightly above RBC Capital Markets’ forecast of 17.5%. 

LFL sales growth was reported at 6.5% year-on-year, marginally above RBC’s high-end expectation of 6.4%. Growth had been 6.8% at the end of August, indicating a “softening in September so far.”

“We note a softer exit rate in September, owing to recent general strikes and unrest in France. We view Action as a high-quality retailer with significant long-term growth potential, but the degree of outperformance has narrowed this year,” the brokerage said.

3i attributed the weaker performance to “weaker overall consumer spending in France and Germany,” which have weighed on year-to-date results. 

Operating EBITDA for the last 12 months to the end of period nine in 2025 is expected to reach about €2.3 billion, in line with forecasts. Cash balances stood at €758 million as of September 21.

Action added 207 net new stores year-to-date, exceeding the expectation of 202, and remains on track to deliver or exceed 370 net new stores in 2025. This expansion includes the opening of seven stores in Switzerland and the launch of its first store in Romania.

In a strategic move, 3i entered into an agreement with GIC to purchase a 2.2% stake in Action in exchange for issuing 19.9 million new ordinary shares in 3i Group. 

3i said its broader private equity portfolio was showing improved momentum, with Royal Sanders performing well. 

Since its July update, the group has sold MAIT, generating total gross proceeds of £143 million, a 30% uplift over its March 2025 valuation, and delivering an estimated internal rate of return of about 27%.

“Prior to today, 3i was trading at a c.29% premium to our FY26e NAV/share forecast, ahead of its c.23% average, which we think reflects an increasing contribution from the highly rated Action business.” RBC said. 

“The implied CY26e P/E for Action is c.33x. In our view, this looks fair for a well-managed business, but with more limited potential upside near-term.” 

RBC maintains a “sectorperform” rating with a price target of GBp 3,650.