Carrefour: Carrefour sales fall in France and Europe

(BFM Bourse) – The distributor published activity lower than consensus both in France and on the Old Continent for the first quarter.

The market sanctions the publication of Carrefour this Thursday. The French distributor delivered its first quarter activity on Wednesday after the market closed, a publication which received a gloomy reception from investors this Thursday.

The stock dropped 2.4% around 10:50 a.m., showing the second biggest drop in the CAC 40.

The group chaired and managed by Alexandre Bompard recorded year-on-year growth in its revenues of 13.5% at a number of comparable stores in the first quarter and 12.1% at constant exchange rates, for total sales of 22. 16 billion euros.

But as often in recent quarters, this figure is inflated by growth in Argentina of 265% over the quarter which itself can be explained by the hyperinflation that the Spanish-speaking country is experiencing (more than 250% over one year last January ).

>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio

Competition in France and Poland

In France, Carrefour sales fell by 0.4% on a like-for-like basis, with an increase of 0.4% for food and a drop of 7.5% for non-food. By store format, hypermarkets suffered once again (-1.3%) while supermarkets (+0.1%) and convenience stores (+0.8%) posted slight increases. “This performance comes in a context of slowing inflation and volumes still under pressure,” underlines the company.

Oddo BHF notes that performance in France is lower than consensus forecasts which, according to the broker, expected a decline limited to 0.1% on a comparable basis.

“In March, the group lost 0.4% of market share (-0.6% in January and -0.8% in February), according to Kantar,” explains the research office.

“Recall that the group began its price repositioning in the fourth quarter of 2023. This initiative resulted in a positive reaction in terms of “net promoter score” (this indicator which measures customer satisfaction increased by 8%, Editor’s note) and should normally result in better market share dynamics in the medium term… but at the cost of new investments in prices, financed by more cost reductions (1.2 billion euros at group level compared to 1 billion euros initially planned), a strategy somewhat forced by the competitive environment in our opinion”, also underlines Oddo BHF.

In Europe excluding France, where Carrefour is present in Spain, Italy, Belgium, Romania and Poland, sales fell by 0.2% on a comparable basis while the consensus was expecting an increase of 0.8%. The company particularly suffered in Poland (-4.2%), penalized by competitive intensity, “with the impact of the offensive strategy of Biedronka and Lidl on prices”, explains Oddo BHF.

Return to the green in Brazil

Note, moreover, that Brazil marks a positive trend change. Sales increased by 1.3% over the first three months, returning to the green after three negative quarters.

“Activity is progressing significantly month after month, with growth of +3.7% like-for-like in March. This good performance reflects the improvement in commercial dynamics in all formats, with a recovery in volumes, in a context return to slightly positive food inflation,” explained Carrefour.

Following this publication, the bank Morgan Stanley chose to lower its opinion from “overweight” to “online weighting” on the stock, as well as its price target to 18 euros from 20.30 euros.

The bank explains that “the competitive environment in France and Carrefour’s competitive positioning have deteriorated beyond (its) initial expectations.” “First quarter market share fell 60 basis points (0.6 percentage points) year-on-year and we expect Carrefour to further narrow its price gap versus Leclerc, with heavy investments to come,” she adds.

Oddo BHF, for its part, maintained its opinion at “neutral”, saying it was cautious “because of (its) fears about France, where we think it will be necessary to choose between margins or market shares (succeed in both in this environment). economic and competitive deterioration seems very optimistic to us).

Julien Marion – ©2024 BFM Bourse