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Carrefour’s Brazilian entity has hosted an Investor Day. While the management plans to improve the profit margin through various levers, most of these had already been expected by the market. While the strategy to shed flab and strengthen FCF is an overall positive, we do not expect any material changes to our current estimates.
Companies: Carrefour (CA:EPA)Carrefour SA (CA:PAR)
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Following Carrefour’s Q3 FY23 results last week, its Brazilian business has released detailed results in line with our expectations. The adjusted EBITDA margin declined by 67bps yoy to 5.7%, with the weakness in the retail segment (1.7% margin; -212bp yoy) partially offset by the cash & carry format (6.7% margin; +4bp yoy). Although the C&C performance was weaker vs close competitor Assai, we expect margins to improve gradually. The Grupo Big integration is also likely to remain on-track. Our po
Carrefour’s Q3 FY23 performance was ahead of the market’s expectations. Lfl sales grew by 9.0% yoy (+150bp vs consensus), with all the business segments remaining strong. Consumers continued to trade down, with volume still contracting in the Q3. Moreover, the integration of Grupo Big is on-track and the 2025 synergy target of BRL 2.0bn was re-confirmed. The group’s FY23 guidance is also achievable, although the market was apprehensive about the weakness in Latin America. Our positive recommenda
Carrefour’s H1 FY23 performance was slightly ahead of the market’s expectations. In Q2, the group’s lfl sales growth of +10.3% was +150bp vs the consensus. All operating segments clocked robust performances – France: +7.3%, Europe (excluding France): +7.4% and Latin America: +17.3%. Recurring operating income (-9.6% yoy) was c.3% ahead of the street’s expectations. Despite the current softness in Brazil, this is a non-structural issue. The management confirmed its financial targets for 2023 and
Carrefour has announced the acquisition of the Cora and Match banners in France. According to the management, the acquired stores have a complementary geographical presence. It expects €110m of annual synergies at the EBITDA level after three years. However, the increased exposure to big box stores could be a turn-off for many. This all-cash deal has been done at an EV/EBITDA multiple of 4.2x and EV/Sales of 0.20x (0.24x excl. petrol), i.e. a 15-20% discount vs the sector average. We will incre
Carrefour’s Q1 trading performance was stronger than both our and the market’s expectations. The group’s lfl sales came in at +12.3% yoy, with robust performances in all operating regions. The main positives are: 1) the retailer gained market share in all key countries, 2) French hypers are benefiting from improved pricing / promotions, 3) new management in Belgium is gradually turning around the performance, and 4) the integration of Grupo Big is on-track. We maintain our positive stock recomme
Carrefour’s FY22 performance was in-line with our and the market’s expectations. The group’s lfl sales grew 8.5% (vs consensus of 6.7% yoy), with positive momentum in all operating regions (France: +3.4%, Other European Countries: +4.9% and LatAm: +24.6%). While profitability was in line with the street’s expectations, the stock price surged 7% following the stronger-than-expected performance in France (both market share and margin), a new €800m share buyback plan and the on-track integration of
Carrefour has announced a promising strategic plan named ‘Carrefour 2026’. It entails measures like an increased focus on the discount format (cash & carry/hypermarkets), private labels and a switch towards a franchising model for stores. The targets of €4bn pf cost savings and net FCF of €1.7bn look achievable. While the CEO’s proven track-record is reassuring, the market was unimpressed. It may be that risk-averse investors are more concerned about the near-term performance (2023 sales, profi
Carrefour’s Q3 performance was ahead of our and the market expectations. Group’s lfl sales grew 11.3% yoy, with positive momentum in all operating countries. According to the management: 1) Carrefour is on track to achieve the FY22 EBIT consensus, and 2) the net FCF target of 2022 will be comfortably above €1bn (vs previous guidance of at least €1bn). The CEO will unveil the new strategy on 8 November 2022, which will be a key stock price trigger. We maintain a positive stance on the stock’s val
Carrefour’s Q2 and H1 performance was in line with our expectations. In Q2, the group’s lfl sales grew by 7.3%, with positive momentum witnessed in the core operating regions (France: +1.4%, Spain: +4.8% and Brazil: +19.4%). Profitability was flat yoy and the FY22 cost savings target has been increased by €100m. Management will present the new strategic plan on 08 November 2022, which should be a key stock price trigger. We maintain our positive view on the stock’s valuation.
Carrefour’s Q1 trading performance (+3.4% yoy) was in line with our estimates. While LatAm once again led the pack, the French business clocked a flattish performance. The company continued to gain market share in the core regions and also confirmed FY22 FCF of at least €1bn. However, the lfl decline in French hypers and the poor showing in Belgium were unpleasant surprises. The new strategic plan (expected in fall 2022) is likely to be a key stock price trigger. Our positive recommendation is r
Carrefour’s performance for FY21 was slightly ahead of ours and well as street estimates. The retailer gained market share in all core operating countries (France, Spain and Brazil). As a positive development, a share repurchase plan with €750m has also been launched for 2022, which reflects management’s confidence of the strength of its business model. The cost-savings plan has also been increased by €300m to €2.7bn. The CEO will share his new strategy in H2 FY22. Positive recommendation is mai
Carrefour has become flavour of the season as M&A news is recurring for this French grocer. News reports state that Auchan is preparing a fresh acquisition bid and is in talks with a PE fund. Any such development reiterates our conviction of the stock’s attractiveness. However, we doubt if any such announcement would be made before the upcoming French Presidential elections.
Carrefour hosted a promising ‘Digital Day’, which revealed an ambitious plan to achieve additional recurring operating income (ROI) of €600m by 2026. This amounts to c.27% of 2020 group’s performance. The four key pillars of this strategy are credible and backed by a proven track record of the top management. The key focus on food e-com and data monetisation are steps in the right direction. We maintain our bullish view on the stock’s valuation.
Carrefour’s Q3 sales performance was a mixed bag. While the LatAm business produced a robust show (despite a tough comparable base), the French operations were mired by some hiccups in the hypermarket format (temporary introduction of the health pass). The retailer will host a Digital Day on 9 November 2021, which could be a key catalyst if management is able to present a convincing strategy to boost the e-com performance (sales plus new income streams). Buy recommendation maintained.
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