(News Bulletin 247) – Group sales fell into the red in France on a like-for-like basis in the first quarter, weighed down by hypermarkets and supermarkets. The debt in France, it remains at 4.5 billion euros, suggesting that the distributor has burned a lot of cash over the period.

Casino continues to post worrying performances. The Saint-Etienne distribution group has published quarterly sales which, once again, are far from satisfactory.

Over the first three months of the year, sales amounted to 5.4 billion euros, up 1% year-on-year like-for-like. But this progress is driven by Latin America, where growth was 9.5%.

On the “France Retail” scope – i.e. activities in France excluding Cdiscount – Casino saw a drop in sales of 0.4% like-for-like, a significant drop in view of the high inflation of food prices in France (15 .9% over one year in March, for example). In the fourth quarter of 2022, sales in this “France Retail” scope were stable like-for-like. The bad dynamic of the group was therefore amplified.

Hyper and supermarkets in the hard

If Parisian and local brands, such as Monoprix and Franprix, continue to grow, Casino is once again weighed down by its supermarkets and hypermarkets, which show respective drops of 7.8% and 12.4% like-for-like. The company evokes a “difficult context” and explains that it has passed “significant price readjustment measures since the beginning of the year” in these types of brands.

“The plunge in turnover in supermarkets and hypermarkets is problematic and shows that the group is losing volumes and market share”, underlines Clément Genelot, analyst at Bryan Garnier & Co.

But beyond the activity of the group, all the attention of the market is focused on the debt of the company, in particular in France, since it is on this perimeter that Casino must respect “covenants”, it is that is to say commitments in matters of indebtedness, with its creditors.

However, at the end of March, Casino’s net debt in France remained stable at 4.5 billion euros, with the covenants however being respected at that date.

“What is striking is the extent of the ‘cash burn’ in the first quarter. Net debt in France is almost stable compared to the end of December, while opposite the group sold 800 million euros of Knowing that the company used 100 million euros to buy back bonds, this means that Casino has consumed 700 million euros in cash on its activities, in very sharp decline, “points out Clément Genelot.

“In France, they end the quarter with 286 million euros in cash, which is very uncomfortable. The company previously explained that it needed around 400 million euros to operate calmly”, also underlines the ‘analyst.

Speculation on the title in recent sessions

On the Paris Stock Exchange, the action, very volatile, collapsed by 15% around 10:40 a.m. It should be noted, however, that the stock had risen by almost 20% over the previous five sessions.

This latest move is hard to justify given the lack of really positive news for the band in recent days. “It’s hard to explain. It can be buyouts of shorts [des investisseurs qui soldent leurs positions de ventes à découvert et qui, donc, rachètent le titre pour clôturer cette position, NDLR] or even individuals who can position themselves on the title”, estimates Clément Genelot.

Another financial intermediary is also struggling to decipher this movement evoking “perhaps technical positions of ‘hedge funds’, bets” with in sight speculations on the rise in capital of Daniel Kretinsky.

The Czech businessman proposed a plan last week to bail out Casino via a capital increase of 1.1 billion euros, of which 750 million euros would be provided through his company Vesa Equity Investment. This operation would mean that Jean-Charles Naouri, the CEO of Casino, would potentially lose control of the group. The operation also poses as a precondition a cancellation of Casino’s gross unsecured debt of a “very substantial” magnitude via a conversion into capital.

In an interview at Point published on Wednesday, Daniel Kretinsky assured that this proposal was not “hostile” and that Jean-Charles Naouri could retain “a prominent place” in the group. He also explained that this proposal did not conflict with the potential merger between Casino and Teract, a subsidiary of the agricultural cooperative InVivo which notably owns Gamm’ Vert and Jardiland.

The group of independent stores Les Mousquetaires recently joined the discussions and could make, jointly with InVivo, an investment of 300 million euros in the potential new entity formed by Teract and Casino.