Carrefour’s stock has plummeted by 9.41% to 12.415 euros, following disappointing annual results and forecasts. The company reported a net profit of 1.08 billion euros for 2024, below expectations. While revenue rose slightly to 94.55 billion euros, growth slowed significantly in the fourth quarter. Carrefour faces challenges from price competition in Europe but aims for modest growth under its ‘Carrefour 2026’ initiative. The retailer is also reviewing its asset portfolio and has increased dividends amid rising net debt.
Carrefour’s Stock Faces a Significant Decline
In a surprising turn of events, Carrefour’s shares have dropped by 9.41%, trading at 12.415 euros, even as the broader market trends upward. This decline comes on the heels of the retail powerhouse’s mixed annual performance and forecasts that fell short of expectations. The company, led by Alexandre Bompard, reported a net profit of 1.08 billion euros for 2024, which reflects an 11% decrease compared to analysts’ projections of 1.15 billion euros. The current operating profit also saw a contraction of 2.2%, landing at 2.21 billion euros, while analysts anticipated a figure of 2.28 billion euros.
On the revenue front, Carrefour experienced a modest increase of 0.4%, reaching 94.55 billion euros. However, growth slowed significantly during the fourth quarter, registering only 7.1%. This slowdown was largely attributed to a 2.1% decline in comparable sales within France.
Strategic Moves and Future Outlook
Stifel noted that European markets, particularly outside of France, were significantly affected, which adversely impacted Carrefour’s overall performance for the 2024 fiscal year and its forecasts for 2025. Despite the challenges, Stifel maintains a ‘Buy’ rating on the stock but has adjusted its price target downward from 18 to 16.5 euros.
Carrefour’s CEO highlighted ongoing challenges in the European market, citing intense price competition and substantial investment in pricing strategies that have affected profitability in the region. In light of these circumstances, Carrefour has reaffirmed its goals under the ‘Carrefour 2026’ initiative, projecting modest growth in EBITDA, current operating profit (ROC), and free cash flow for 2025.
Additionally, Carrefour has initiated a review of its asset portfolio, including a buyout offer aimed at minority shareholders of its Brazilian subsidiary, where it currently holds a 67.4% stake. The retailer is looking to increase this ownership to 100% through a takeover bid. Analysts suggest that this review may lead to divesting from underperforming markets in Europe, such as Italy and Poland, potentially boosting investor sentiment.
In 2024, Carrefour expanded its presence by acquiring competitors Cora and Match in France, as well as around thirty stores from the struggling retailer Casino. This expansion has contributed to a rise in net debt from 2.6 billion to 3.8 billion euros, primarily due to these acquisitions.
Amid these developments, Carrefour’s CEO, Alexandre Bompard, announced an increase in the ordinary dividend by 6%, bringing it to 0.92 euros per share, alongside an exceptional dividend of 150 million euros.
As Carrefour navigates these challenges and opportunities, stakeholders will be closely monitoring the company’s strategic decisions and their impacts on future performance.