After a strong run, we still think Carrefour''s shares can outperform Conventional wisdom is that you fix a food retailer through a combination of price investment and cost saving; whilst the latter rarely shows up in earnings, the price investment hopefully reinvigorates the top-line. The reality has always been more complex; price isn''t everything and Carrefour seems to be showing the benefits from fixing basics like price integrity, availability and service. We see the potential for multi-year payback and though that might mean the shares grind higher rather than see many more 20% 6-month bumps, we still think they can Outperform. How high can the French margin go; 3% is ambitious but possible Rather than arguing for further rerating, the big question now for Carrefour''s shares is how high can the French EBIT margin go? It peaked at 6%, troughed at 1.3% and was 1.8% in 2020. Carrefour suggests it should be 3% which is some way above our short-term expectation and we prefer to err on the side of caution; margins readily adjust downward, not upward in food retail. But if the group can continue to hold or even win market share in France without material price investment, retention of part of the EUR2.4bn cost saving plan should do the hard work. French environment seems supportive at present The French environment looks still to be supportive for margin recovery; government policy seems keen to put more profit into the industry in the hope it trickles down to smaller producers. There doesn''t seem to be anybody aggressively grabbing for share either. We would keep an eye on Lidl, it could put pressure on Leclerc but in an environment of higher inflation, we''re relatively confident the market can keep its cool and pass cost increases through to the consumer. Brazilian Real is showing encouraging signs of stabilisation, even inflection Carrefour''s Brazilian business remains the star of the show, though as it hits an integration phase and...