Company Reports

Carrefour reported a first-quarter trading update, with group like-for-like sales up 13.5%. Within this, France reported negative 0.4% like-for-like growth in the quarter, reflecting lower inflation and price investments with volumes remaining under pressure and nonfood sales continuing to underperform (down 7.5%). Supermarket and convenience store sales were flat, while sales in hypermarkets were down 1.3%. Notably, Carrefour's private-label brand now accounts for 37% of food sales (versus 35% in first-quarter 2023), which is in line with evidence from European peers reporting private-label outperformance.

Carrefour reported fourth-quarter 2023 sales and fiscal 2023 results, with group like-for-like sales up 10.2% in the fourth quarter and up 10.4% in fiscal 2023. Within this, France reported 1% like-for-like growth in the quarter, supported by like-for-like growth across formats. Supermarket sales were up 0.6%, hypermarket sales were up 0.3%, with trends for convenience stores continuing to be resilient, up 3.2% on a like-for-like basis. Carrefour France had a strong 2023 performance, with like-for-like sales up 4.7%, driven by solid like-for-like sales growth in food (up 6%, while nonfood was down 4.9%). Top-line performance translated into good profit growth with recurring operating income up 18.5% for the year, to a 2.6% operating margin from 2.2% the previous year.

Carrefour reported a third-quarter trading update, with group like-for-like sales up 9%. Within this, France reported 4.3% like-for-like growth in the quarter, supported by resilient like-for-like growth across formats. Supermarkets sales were up 3.8%, but the standout performance came from the Hypermarkets segment, which was the main driver (up 4.2%), with trends for convenience stores continuing to be strong, up 5.3% on a like-for-like basis. Carrefour France reported another notable performance. Recent trends in the region confirm that execution and positioning of the business continue to yield tangible results in a key market (France) and channel (hypermarkets), driven by solid like-for-like sales growth in food (up 5.7%, while nonfood was down 6.8%).

Carrefour reported another solid quarter in its first-half 2023 results, with group like-for-like sales up 10.3%. Within this, France reported 7.3% like-for-like growth in the second quarter, supported by resilient like-for-like growth across formats. Hypermarkets were up 6.6% and supermarkets 7.6%, while trends for convenience stores continued to be strong, up 8.2% on a like-for-like basis. Carrefour France reported another notable performance, coupled with volume market share and new customer gains during the first half (567,000 new customers, according to the company). Carrefour has come a long way in France. Recent trends in the region confirm that execution and positioning of the business have yielded tangible results in a key market (France) and channel (hypermarkets), driven by solid like-for-like sales growth in food (up 8.5%, while nonfood was down 3.1%). Profitability improved by 36 basis points versus last year with recurring operating income at 1.4% in the first half.

Carrefour provides exposure to global food retail with a high European weighting, mostly in the mature and competitive western part of the continent: France, Spain, Italy, and Belgium. However, it is highly exposed to the large hypermarket format, which is in structural decline in mature markets. This is because of consumer behaviour shifts and demographic trends (less waste, lower family formation rates, smaller families), which have contributed to the structural growth of convenience over one-stop shops, with shoppers preferring more frequent shopping trips and smaller baskets.

Carrefour reported solid first-quarter 2023 results with group like-for-like sales (excluding petrol and calendar effects) up 12.3%. Within this, France reported 7.1% like-for-like growth in the first quarter, supported by resilient like-for-like growth across formats. Hypermarkets were up 6%, supermarkets up 7.1%, while trends for convenience stores continued to be strong, up 9.6% on a like-for-like basis. This is another notable performance by Carrefour France, which was coupled with volume market share and new customer gains during the quarter (560,000 new customers, according to the company). In France, Carrefour has come a long way and recent trends in the region confirm that execution and positioning of the business has yielded tangible results in a key market (France) and channel (hypermarkets), with the latter benefiting from its discount appeal and driven by solid like-for-like sales growth in food (up 7.5%). Brazil was up 5.7%, which reflects market share gains, according to the company. The integration of Grupo BIG is underway with 42 remaining store conversions expected to be completed in the second quarter (82 converted to date). Europe's like-for-like growth was 8.8% with all countries contributing to positive growth (Belgium was up 9.9% with hypermarkets leading market share gains). The company has completed EUR 200 million of its EUR 800 million share buyback program and confirmed guidance for 2023, with Carrefour expecting growth in EBITDA, recurring operating income, and net free cash flow in line with our estimates. We don't expect to materially change our EUR 18.40 fair value estimate for Carrefour. At current levels, shares trade in 3-star territory.

Carrefour reported stellar fourth-quarter 2022 results with group like-for-like sales up 10.9% (11.3% in the third quarter). Within this, France reported 5.6% like-for-like growth in the fourth quarter, supported by resilient like-for-like growth across formats. Hypermarkets were up 3.7%, supermarkets up 5.9%, while trends for convenience stores continued to be strong, growing by 10.7% on a like-for-like basis. This is another notable performance by Carrefour France, especially considering the promising market share gains recorded during the quarter in value (0.2%) and volume (0.3%). In France, Carrefour has come a long way and recent trends in the region confirm that execution has yielded tangible results in a key market (France) and channel (hypermarkets) for the group. Brazil was robust (11.1% like-for-like growth) with market share gains and volume expansion. Europe's like-for-like growth was 6.2% with all countries contributing to positive growth (Belgium was up 3.4% in an "extremely competitive market"). EBIT showed an improvement of 8.3% at EUR 2,377 million versus EUR 2,415 million in our model with group margins stable year on year. Notably, net free cash flow was EUR 1,262 million (versus guidance of over EUR 1 billion), with the company announcing a new EUR 800 million buyback program during 2023 (after EUR 750 million and EUR 700 million in 2022 and 2021 respectively), which we applaud. Guidance for 2023 was light on details, with Carrefour expecting growth in EBITDA, recurring operating Income, and net free cash flow in line with our estimates. We don't expect to materially change our EUR 18.40 fair value estimate for Carrefour. At current levels, shares trade in 3-star territory.

On Nov. 8, Carrefour issued a press release highlighting its "Carrefour 2026" strategic plan, following the successful implementation of its five-year transformational plan (announced in 2018). Within this new plan, Carrefour intends to increase its annual capital expenditures to EUR 2 billion (versus EUR 1.7 billion before and around EUR 1.8 on average over the next four years in our model) and thus targets more than EUR 1.7 billion in net free cash flow by 2026 (versus close to EUR 2 billion in our model). Although the latter is a minimum target, we perceive the capital expenditures goal to be on the high side relative to both our and consensus estimates. Part of this higher budget is a function of additional capital needs for the expansion of Atacadao in Brazil (EUR 150 million), the doubling of the budget allocated to energy reduction projects (to EUR 200 million from EUR 100 million), and the support of the "Maxi" method in all European stores (about EUR 50 million for store remodeling), on top of the EUR 600 million allocated to the group's digital transformation announced at the digital day. On cost savings, Carrefour targets EUR 4 billion, roughly EUR 1 billion per year, which is in line with the current run rate, and plans to utilize it regularly to improve its competitiveness in order to "continue to gain market share in its key geographies." Along with the strategy update, Carrefour announced the creation of a joint venture with Publicis (Carrefour will hold 51%) to strengthen the group's retail media capabilities. This new initiative could enable the company to exceed the target of EUR 200 million in additional recurring operating income by 2026 announced at digital day. Carrefour also reiterated its digital goals, with omnichannel customers composing 30% of its customers (versus 11% in 2021) and EUR 10 billion e-commerce gross merchandise value in 2026. We don't expect to change our EUR 18.4 per share valuation and no-moat rating for Carrefour.

Carrefour reported third-quarter 2022 results with group like-for-like sales up 11.3%. Within this, France reported 6.6% like-for-like growth in the third quarter, supported by 5% like-for-like growth in hypermarkets (due to the discount profile). Supermarkets followed suit with like-for-like growth of 6.3%, while trends for convenience stores continued to be strong, growing by 10.8% on a like-for-like basis. This is a notable performance by Carrefour France, especially considering the promising market share gains recorded during the quarter in value (0.3%) and volume (0.5%). In France, Carrefour has come a long way and recent trends in the region confirm that execution has yielded tangible results in a crucial market (France) and channel (hypermarkets) for the group. Brazil was robust (11.5% like-for-like growth) with market share gains and volume expansion. Europe's like-for-like growth was 8.6% with all countries contributing to positive growth (Belgium was up 5.2% in an "extremely competitive market"). Management reiterated guidance on free cash flow ("comfortably above EUR 1 billion per year" versus EUR 1.8 billion in our model), but did not provide it for group EBIT (though they commented that consensus for operating profit of around EUR 2.44 billion is consistent with trends, versus EUR 2.415 billion in our model). Notably, the grocer confirmed an acceleration in the shift in purchasing behaviour across Europe during the second quarter, with more frequent lower average basket shopping trips as well as notable downtrading (higher sales of lower-priced products), especially in Spain and Romania. Last, Carrefour reiterated its cost-saving plans (more than EUR 1 billion in 2022, part of an upgraded EUR 2.8 billion target by 2023). We maintain our EUR 18.40 fair value estimate and no moat rating for Carrefour. At current levels, shares trade in 4-star territory.

Carrefour provides exposure to global food retail with a high European weighting, mostly in the mature and competitive western part of the continent: France, Spain, Italy, and Belgium. However, it is highly exposed to the large hypermarket format (about 50% of total European sales), which is in structural decline in mature markets. This is because of consumer behaviour shifts and demographic trends (less waste, lower family formation rates, smaller families), which have contributed to the structural growth of convenience over one-stop shops, with shoppers preferring more frequent shopping trips and smaller baskets.

Carrefour reported first-half 2022 results with group like-for-like sales up 5.4%, despite strong comps (up 7.3% in the second quarter of 2022 versus up 3.6% in the same period last year). Within this, France reported 1.4% like-for-like growth in the second quarter, weighed down by negative 0.5% like-for-like growth in hypermarkets, but against a tough comparable base (the second quarter of 2021 was up 4.3% for the channel). Supermarkets faced similar headwinds with like-for-like growth down 0.7% (versus up 7% in the second quarter last year), while trends for convenience stores were strong, growing by 10.1% on a like-for-like basis (versus negative 3% in the same period last year). Brazil was strong (up 19.4% like-for-like growth and a positive contribution of 15.6% from acquisitions and new openings) with market share gains and volume expansion despite tough comparables. Europe's like-for-like growth was up 3.8% with all countries, but one, contributing to positive growth (Belgium was down 4.8% as expected). Management reiterated guidance on free cash flow ("comfortably above EUR 1 billion per year" versus EUR 1.8 billion in our model), but did not provide one for group EBIT (though they commented that consensus for operating profit of EUR 2.49 billion is consistent with trends, versus EUR 2.415 billion in our model). Carrefour also confirmed its capital expenditure guidance of EUR 1.85 billion including EUR 150 million related to the integration of Grupo Big in Brazil, in line with our estimates. Notably, the grocer confirmed continued strength in food e-commerce growth, which was up 22% in the second quarter after being up 10% in the first quarter and compared with a 56% rise in first-quarter 2021. We raise our fair value estimate to EUR 18.40 per share from EUR 17 after incorporating Grupo Big in our Latin America estimates and associated synergies as well as accounting for time value of money. At current levels, shares trade in 3-star territory.

Carrefour provides exposure to global food retail with a high European weighting, mostly in the mature and competitive western part of the continent: France, Spain, Italy, and Belgium. However, it is highly exposed to the large hypermarket format (about 50% of total European sales), which is in structural decline in mature markets. This is because of consumer behaviour shifts and demographic trends (less waste, lower family formation rates, smaller families), which have contributed to the structural growth of convenience over one-stop shops, with shoppers preferring more frequent shopping trips and smaller baskets.

Carrefour reported first-quarter 2022 results with group like-for-like sales up 3.4%, despite strong comps (up 4.2% in the first quarter of 2021). Within this, France reported flat growth with like-for-like growth in hypermarkets down 1.1% but against a tough comparable base (the first quarter of 2021 was "the best quarter in terms of market share trend in 4 years" for the channel). Supermarkets faced similar headwinds with like-for-like growth down 2.9% (versus up 7% in the first quarter last year), while trends for convenience stores reversed, growing by 9.4% on a like-for-like basis (versus negative 2.7% in the same period last year). Brazil was strong (up 7.5% like-for-like growth) with market share gains and volume expansion despite tough comparables. Management reiterated guidance on free cash flow ("comfortably above EUR 1 billion per year ") but did not provide one for group EBIT. Notably, the grocer confirmed continued strength in food e-commerce growth (which was up 10% in the first quarter versus up 56% in the first quarter of 2021 and up 45% versus the same period in 2020). We don't expect to materially alter our EUR 17.00 fair value estimate. At current levels, shares trade in 2-star territory.

We don't expect to change our fair value estimates for our European food value chain coverage list due to the recent Russia-Ukraine conflict.

Carrefour reported fiscal-year 2021 results with group like-for-like sales up 2.3% (up 10.1% on a two-year basis). Within this, France reported like-for-like growth of 1.8% with like-for-like sales for hypermarkets and supermarkets down 1.8% and 1.3% respectively. Performance was mixed across formats and regions with market share gains in supermarkets in France, Brazil, and Spain. Belgium performance (down 4.2%) was particularly negative, on the back of a very competitive market and Carrefour's own supply chain issues. The company reported underlying EBIT of EUR 2.27 billion in line with the EUR 2.267 billion in our model and free cash flow of EUR 1.228 billion in line with guidance. Management reiterated guidance on free cash flow ("comfortably above EUR 1 billion per year from 2021") but did not provide one for group EBIT. Capital expenditure is now expected at EUR 1.7 billion including EUR 150 million for the integration of Group BIG in Brazil. On a positive note, management announced a new EUR 750 million buyback program, following the EUR 700 million completed in 2021. We are pleased with management's capital allocation practice, with more than 8% of current market cap returned back to shareholders in the form of cash dividends and share buybacks. We don't expect to materially alter our EUR 17.00 fair value estimate. At current levels, shares trade in 3-star territory. The grocer commented on energy and food price inflation, the impact of which has been limited to its performance in 2021 as contracts with suppliers are negotiated for the whole year for most of its purchases in Europe (in line with recent commentary by large FMCG companies like Nestle). That said, the company expects these impacts to be more meaningful in 2022 for all players in the market. The closing of the Group BIG transaction is expected at the end of the first half (2022) with more than EUR 300 million synergies expected (we don't incorporate the transaction in our estimates yet).

In its Digital Day event on Nov. 9, Carrefour presented its new "data-centric, digital-first" approach, which will be based on four key pillars: 1) acceleration of e-commerce, 2) ramp-up of data and retail media activities, 3) digitization of financial services, and 4) transformation through digital of traditional retail operations. Within this, the grocer also revealed specific financial targets in connection with the new digital strategy. Carrefour now aims to triple its online GMV (gross merchandise value) by 2026 to reach EUR 10 billion (from around EUR 3.3 billion expected in fiscal 2021), which it expects to contribute an additional EUR 600 million to recurring operating income in 2026 versus 2021, implying a 9% marginal profit margin. The required investment to enable this will be about EUR 3 billion (by 2026 or about 50% increase in digital investments) or an expected 20% return on investment, higher than that of some of its peers. As a result, the group is raising the annual capital expenditure budget to EUR 1.7 billion (from EUR 1.5 billion-EUR 1.7 billion guidance previously). We note that a number of grocers in our European coverage have started to introduce specific financial targets in connection to their online channels, which is in line with our thesis that online constitutes an opportunity for scaled grocers that are willing to invest in new capabilities (technology and automation) and revenue streams (advertising and data monetization). We don't expect to change our EUR 17.00 fair value estimate and no-moat rating for Carrefour. At current levels, shares trade in 3-star territory.

Carrefour reported third-quarter 2021 results with group like-for-like sales up 0.8%, partially impacted by strong comparables (up 8.4% in the third quarter of 2020). Within this, France reported like-for-like decline of 0.3% with like-for-like sales for hypermarkets down 2.8% (up 2.5% in the third quarter of last year) the result of the introduction of the sanitary pass in the country (up 0.5% excluding this). Performance was mixed across formats and regions with market share gains in supermarkets in France and Spain but relatively underwhelming growth (up 1.2% and down 2.3%, respectively). Belgium performance (down 5.4%) was particularly negative, on the back of a declining market. Management reiterated midterm guidance on free cash flow ("comfortably above EUR 1 billion per year from 2021") and confirmed group EBIT target of EUR 2.26 billion (in line with consensus and our own estimates). The grocer also confirmed continued strength in food e-commerce growth, though at a significantly lower pace in the third quarter (up 19% in the third quarter, up 100% growth over the last two years) and announced a Digital Day event on Nov. 9, 2021, where the company will present its digital strategy and opportunities.

Carrefour provides exposure to global food retail with a high European weighting, mostly in the mature and competitive western part of the continent: France, Spain, Italy, and Belgium. However, it is highly exposed to the large hypermarket format (about 50% of total European sales), which is in structural decline in mature markets. This is because of consumer behaviour shifts and demographic trends (less waste, lower family formation rates, smaller families), which have contributed to the structural growth of convenience over one-stop shops, with shoppers preferring more frequent shopping trips and smaller baskets.

Carrefour reported second-quarter 2021 results with group like-for-like sales up 3.6%, despite strong comps (up 6.3% in the second quarter of 2020). Within this, France reported solid like-for-like growth of 4.7% with like-for-like hypermarkets up 4.3%, with "continuing market share gains in each format." Management reiterated the recently updated midterm guidance on free cash flow and cost-saving targets ("comfortably" above EUR 1 billion per year from 2021 and about EUR 2.4 billion on an annual basis by 2023, respectively). It announced a further EUR 200 million of share buybacks in the second half (on top of EUR 500 million share buyback program for 2021, which is equivalent to more than 8% of market cap cash return to shareholders for fiscal 2021 including dividends), and which is in line with recently initiated explicit capital allocation policy. Group recurring operating income reached EUR 740 million implying stable operating margins (at 2.1%). The grocer also confirmed continued strength in food e-commerce growth, though at a significantly lower pace in the second quarter (up 56% in the first quarter and up 26% in the first half and up 120% growth over the last two years). We don't expect to materially change our EUR 16.60 fair value estimate. At current levels, shares trade in 3-star territory.

Carrefour provides exposure to global food retail with a high European weighting, mostly in the mature and competitive western part of the continent: France, Spain, Italy, and Belgium. However, it is highly exposed to the large hypermarket format (about 50% of total European sales), which is in structural decline in mature markets. This is because of consumer behaviour shifts and demographic trends (less waste, lower family formation rates, smaller families), which have contributed to the structural growth of convenience over one-stop shops, with shoppers preferring more frequent shopping trips and smaller baskets.