Carrefour is causing a sensation on the stock market. Shares in the recently slumping French mass distribution leader are surging on the Paris Stock Exchange, gaining more than 7% at the time of writing. It must be said that Carrefour, which has gained market share (both in terms of value and volume) in France, Spain and Brazil, has benefited from the good development of food prices. Turnover and profits jumped. In a context where inflation has put pressure on the purchasing power of households in France, “hypermarkets offering a large number of discounted prices – which consumers prefer – have driven sales up”, notes eToro. Turnover also supported by a merger with a competitor in Brazil.
In a “particularly difficult” context, Barclays welcomes “honest” results, which Jefferies even describes as “impressive”. Carrefour spoils its shareholders by buying back €0.8 billion of its shares this year (providing mechanical support to the share price) and increasing its dividend by 8%. It must be said that the cash flow generation was there in 2022. And Carrefour should withdraw a billion euros of liquidity in a few months, if we take into account the sale in Taiwan.
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Looking ahead, 2023 could be a satisfying year for Carrefour, despite pressures on household purchasing power and recession fears. Commercial momentum appears to be alive. And Carrefour should benefit from its cost optimization and private label strategy. Broker Stifel, which raised its price target per share from 19 to 21 euros (considered very discounted compared to competitors), expects an improvement in Italy after mid-2022.
For his part, Oddo welcomes the improvement in Carrefour’s competitive position and the solidity of its balance sheet, but the financial institution condemns the “adverse” operating conditions and “counterproductive” state interventionism in France.
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