Why the financial markets believe in Carrefour again

One year ago to the day, CEO Alexandre Bompard launched his “Carrefour 2022” plan to make the retailer the “leader in the food transition for all”. With ambitious objectives: achieve five billion euros in turnover in organic products as well as in food e-commerce by 2022, and achieve savings of 2 billion euros by 2020. For y arrive, the former boss of FNAC-Darty promised to quickly and profoundly transform the liner with 88 billion in sales, 380,000 employees and 12,300 stores in 30 countries by tackling subjects that were until now considered to be taboos: the organization of the group, considered inefficient and costly, and the future of hypermarkets, a format in decline where Carrefour is very present. For Carrefour, it was also about taking the digital turn, still shy, at a time when Amazon and Alibaba are watching.

A shy rebound but a rebound all the same

One year after these announcements, the publication on January 22 of the fourth quarter results was an opportunity for Carrefour to take stock of the progress of its strategic plan. Alexandre Bompard first of all congratulated himself on the acceleration in growth recorded over the last three months of the year. The group’s turnover indeed increased by 1.9% on a comparable basis, to 22.638 billion euros, driven by the recovery initiated in Latin America (+ 12.9%, to 4.259 billion). Over the year, sales reached 85.164 billion, up 1.4%. In detail, and not surprisingly given the context of yellow vests, France recorded a decline of 0.1% in the last quarter. A decrease mainly due to hypermarkets (-2.2%) which continue their inexorable decline, while its “supermarket” and convenience formats continue to grow.

Analysts and investors have rather welcomed these operating results, although timid. Analysts at British bank Barclays speak of “resilient performance given a difficult environment” and qualify the publication of Carrefour as higher than their expectations. “Hypermarkets have known structural difficulties but the performance of other formats in France is rather reassuring. We are starting to see positive effects on consumers of the investments made”, also comments Olivier Macard, partner at EY. Another analyst is even clearer on the reasons that push observers to optimism, despite the weak growth in sales and even the decline in France: “We had hit the bottom of the pool. We are starting to see weak signals. which show that there is a beginning of inflection. is starting to get better. “

Strong growth in organic and digital

The transformation of the group seems indeed in working order. Thanks to the global plan launched in September “Act for food”, the group’s organic turnover has risen from 1.3 billion to 1.8 billion euros in one year. Carrefour now offers 750 own-brand organic references and has signed 230 partnerships with producers to support them in their conversion to organic farming. At the same time, the brand has increased its investments in digital: agreement with Google and its Shopping assistant, deployment of unique websites in all of the group’s countries last quarter, inauguration of a new logistics platform for Food e-commerce in Aulnay-sous-Bois and the opening of 200 drives and pedestrian drives in town centers. In Paris, Carrefour now has 31 and plans to have a hundred eventually.

Burst savings

But what especially interested analysts and investors concerns the execution of the savings plan. Last year, the headquarters, spread over 12 sites in Ile-de-France, were brought together in Massy, ​​where the France headquarters are located. Of the 10,500 employees of these offices, 2,400 “volunteers” have packed their boxes. A thousand employees have also packed their bags in Argentina and as many are preparing to do so in Belgium this year. Finally, Carrefour divested 273 of the 611 stores acquired from Dia in 2014. They lost a total of 150 to 200 million euros per year. “The most visible aspect of the arrival of Alexandre Bompard is the reduction in costs in France and abroad. It is perfectly executed”, greets Olivier Macard. Carrefour’s current operating income should thus increase by 85 million euros, to 1.93 billion. On the stock market, the Carrefour share soared 7% the day after its results, to 17.50 euros.