3i Group (LON: III) shares plunged on Thursday this week after the private equity firm revealed disappointing sales growth at Action, its largest investment representing more than two thirds of its £31.8 billion portfolio. The stock was down nearly 20% by early trading, hitting a two-and-a-half year low of £19.71.
Action’s like-for-like sales growth slowed dramatically to 2.4% year-to-date by 10 May, compared with 6.8% over the same period last year. Continued consumer caution in France and lower traffic in Germany since the deterioration of the Middle East situation in late March resulted in flat year-to-date performance in those countries.
Seasonal categories have also been affected by cooler weather in recent weeks, compounding the broader slowdown. Action’s operating earnings before interest, taxes, depreciation and amortisation margin fell to 12.4% in the first quarter of 2026, lower than the 14.8% margin achieved across 2025.
Chief executive Simon Borrows acknowledged the challenging backdrop, saying the market environment remains complex with heightened geopolitical risk from the unresolved Middle East situation in particular. The company expects to see an increase in inflation over the coming months as a result of current conditions.
3i reported a total return of £5.3 billion for the year to March 31, equivalent to 22% on opening shareholders’ funds, down from 25% a year earlier. Net asset value per share rose to 3,030 pence from 2,542 pence, with sterling’s weakness against the euro contributing a £786 million foreign exchange translation gain.
The private equity giant sought to reassure markets by announcing a £750 million share buyback programme to run until the end of 2026, its first in 21 years. The board also recommended a total dividend of 84.5 pence per share, up from 73.0 pence, signalling confidence despite current headwinds.
The company’s Action investment generated gross investment return of £4.5 billion, equivalent to 25% on opening value. Action itself posted net sales of €16 billion in 2025, up 16% year-on-year, with like-for-like growth of 4.9% and operating EBITDA of €2.4 billion at a 14.8% margin.