Carrefour plans investments and financial savings to sort out inflation By Reuters

By Dominique Vidalon

PARIS (Reuters) -Carrefour will step up its enlargement in e-commerce, open extra low cost shops and minimize prices as a part of boss Alexandre Bompard’s new technique to speed up the turnaround at Europe’s largest meals retailer amid hovering inflation.

The French group, which additionally introduced a media three way partnership with advert large Publicis, stated on Tuesday it was aiming for 4 billion euros ($4 billion) in price financial savings and for internet free money circulate of over 1.7 billion euros ($1.7 billion) in 2026.

That may permit Carrefour (EPA:) to pay a money dividend and enhance it by at the very least 5% per 12 months, whereas persevering with a share buyback coverage began in 2021 and seize medium-sized acquisition alternatives, the group stated.

To assist clients with the hovering price of dwelling, it vowed to spice up the share of personal label merchandise in its meals gross sales to 40% in 2026 from 33% in 2022 and to speed up enlargement of low cost shops in its key French and Brazilian markets.

In consequence, Carrefour stated it was elevating its annual funding goal to 2.0 billion euros from 1.7 billion euros beforehand.

“Carrefour 2026 is a plan to be on the offensive in markets marked by inflation and local weather change … Assured within the energy of our mannequin, we are going to make investments extra in our enterprise and shops, whereas considerably enhancing money circulate technology,” Chairman and CEO Alexandre Bompard stated in an announcement.

At 0730 GMT, Carrefour shares had been down 1.3% at 16.35 euros.

“Immediately’s technique is regarding given the give attention to enlargement (extra shops, extra Capex) with out taking the motion required to simplify the group via market disposals, house discount and worth competitiveness,” stated Bernstein analysts.

Bompard, who took the helm in July 2017, was reappointed in Might 2021 for an additional three years.

He faces the problem of delivering the second leg of the group’s turnaround amid an inflationary atmosphere made worse by the battle in Ukraine and with out the additional monetary assets that may have been available if two deliberate tie-ups final 12 months had not failed – one with Canada’s Alimentation Couche-Tard and one other with France’s Auchan.

The brand new plan builds on targets introduced in November 2021 to triple e-commerce Gross Merchandise Worth (GMV) – or the overall worth of merchandise bought – to 10 billion euros in 2026, contributing an additional 200 million euros to recurring working revenue in 2026 versus 2021 as Carrefour seems to remain forward of Amazon (NASDAQ:) on grocery supply.

The partnership with Publicis in retail media will take the type of a three way partnership wherein Carrefour will maintain a 51% stake, the group stated.

($1 = 0.9996 euros)