(BFM Stock Exchange) – The Sino -British bank went from “buy” to “keep” on the action of the large distribution group. The establishment thinks that the company’s management implements the right strategy. But HSBC points to the increase in competition and political uncertainty in France, as well as a “volatile” situation in Brazil.

Carrefour evolves at the tail of the CAC 40 peloton, Friday January 31. The large distribution group sold 1.6%, the second largest drop in the Parisian index, around 3.30 p.m.

The company led by Alexandre Bompard is penalized by a lowering of recommendation from HSBC which has passed to buy “keep” on the title, while reducing its price of courses to 14 euros against 22 euros.

The Sino-British bank believes that Carrefour has implemented the adequate strategy, especially in France where its market shares have started to surf on a good dynamic from the second half of 2024. The establishment sees the fruit of investments in Price made by Carrefour. This allowed him to reach “a good price positioning” compared to Leclerc, the indisputable leader in terms of market share in France, notes HSBC.

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Reversal of competitive pressure

But several opposite winds worry the Sino-British bank, including competitive pressure in France. The establishment explains that the investment strategy in Carrefour prices has not launched a reaction from Intermarché and Auchan because the latter were too busy, last year, to integrate the deficit stores bought in Casino. This limited their financial areas to invest in prices.

The situation could change in 2025, HSBC point. The Bank stresses that Intermarché has an “ambitious strategy” which must lead the brand to hold 20% of the market by 2030, against 17% in 2024. In addition, “the first signs of price drop at Auchan after The integration of Casino stores are starting to be felt, “warns the establishment. As for Leclerc, its enormous market gains for two years (1.7 percentage points) will give it an advantage of size, volumes and in terms of negotiations on suppliers, which will also allow the brand to invest in price.

To this is added a “difficult” context for household consumption, with both economic and political uncertainties.

Complicated situation in Brazil

Consequently, HSBC fear that investments in prices, and therefore promotions, on the part of competitors occur, forcing Carrefour to follow. The bank is not certain that efficiency measures (passage of franchise stores, European purchasing central) and group savings are enough to absorb this wave of pressures on prices, especially if volumes remain asins.

For this reason, the bank thinks that the current operating margin of Carrefour will not improve in 2025 after stagnating (2.6% expected) in 2024.

Beyond France, the establishment points to a complicated situation in several of its European markets. In Belgium, the group is under pressure from the great rival Ahold Delhaize, in Poland the group is award in a prize war between Lidl and Biedronka while in Italy consumption is at half mast.

In Brazil, its second market after France, Carrefour faces a “very volatile environment”, also points to HSBC. Inflation should still mark the next quarters, thus pressing the purchasing power of households.

Admittedly, the valuation of Carrefour is very little demanding in view of those of other distribution companies listed in Europe such as Tesco and Ahold Delhaize. However, HSBC does not see a catalyst likely to trigger a revaluation of the action.

Carrefour will publish its annual results on February 19.