(News Bulletin 247) – The distributor published a turnover that clearly increased in the third quarter and above expectations although weighed down by Brazil. The objectives for 2023 are confirmed.

Carrefour has something to be positive about this Thursday. In a torrent of company publications to dissect for the market, the distributor stands out, taking first place in the CAC 40 (if we exclude Worldline which had plunged by 59% the day before) with an increase of 4.6 % around 10am.

Despite fears about household purchasing power, the company led by Alexandre Bompard delivered solid activity in the third quarter.

Turnover stood at 23.63 billion euros, up 9% like-for-like and 6.9% at constant exchange rates. On its French perimeter, the distributor generated revenues of 10.8 billion euros, an increase of 4.3% on a number of comparable stores.

According to TP ICAP Midcap, the FactSet consensus of analysts expected significantly lower revenues, of 22.73 billion euros for the entire group and 10.73 billion for France.

Oddo BHF judges the publication as a whole to be “of good quality”.

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Retail brands in force

Although food price inflation may be subsiding (which no longer artificially supports distributor sales), household purchasing power continues to face continued pressure.

But Carrefour has levers to support its commercial dynamics in this context. In accordance with its strategic plan, the company is accelerating in private labels.

As HSBC recently highlighted, these brands constitute real strategic weapons for the group. They bring benefits “in terms of differentiation and loyalty and constitute key tools for improving the image of the brand and the price. They offer much greater room for maneuver to reduce prices, while national brands need time to catch up,” the bank explained.

“Carrefour-branded products continue to attract an ever-increasing customer base; they represent more than 35% of food sales over the quarter, up +3 points year-on-year. This rapid progression confirms the group in its ambition to achieve 40% of its own-brand food turnover by 2026,” Carrefour said on this point on Wednesday evening.

Note that Brazil continues to penalize the company’s revenues, with a drop of 3.7% like-for-like over the quarter. The Portuguese-speaking country has experienced deflation in food prices since August. Furthermore, in this country, Carrefour has incurred significant costs in recent months to integrate Grupo Big, which it bought last year, costs which notably include store conversions.

Confidence about the end of the year

At the end of this third quarter, Carrefour assures that it will approach the end of the year “with confidence”, anticipating “a continuation of current trends”. The distributor has confirmed that this year it is targeting growth in its gross operating profit (Ebitda), its current operating profit and its free cash flow.

“At this stage, we consider that the commercial dynamic is satisfactory, although food inflation has slowed for several months and volumes are under increasing pressure, even if the decline is still contained. The main issue is the fact that the drop in food inflation, which is materializing in Europe, does not lead to deflation (as in Brazil) but only to a marked slowdown in the increase, observed at the end of 2022 and the first quarter of 2023″, explains Oddo BHF.

The group’s efforts to improve its market share, profitability and cash flow have led several research firms to be more optimistic about the stock in recent months, such as Morgan Stanley and HSBC.

“Carrefour’s proven mantra of investing in price, perception and quality should continue to help it gain market share in its main geographic areas (France, Spain, Brazil),” underlined mid- October the independent research firm AlphaValue.

“France, a very competitive country, stands out in particular for Carrefour’s continued gains in market share over the last six quarters, despite consumers’ search for cheaper products and reduced-price formats,” he continued.