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Carrefour (CAFP; Baa1, BBB; S) Fine follow-up

CONSUMER STAPLES
Cash curve is unch to +3 (27s), Equities -8%

  • Early equity analyst read-through's are quiet negative, questioning how the proposed clause modifications to franchise agreements will impact margins.
  • Note the co was targeting a shift to franchise like management in the country. In FY23 earnings it said "by 2024, we aim to have half of our revenue coming from franchised stores in France." - most of this from convenience stores. France more broadly represents 45% of group sales and at a 2.6% margin left recurring operating income at 44% of group (group margin is similar 2.7%).
  • Re. why it is pushing into franchise or lease management it said "we see a number of positive impacts on customer satisfaction, on market share of the store in its catchment area, on a number of operating levels, and finally on the profitability." (Q3 call).
  • Again not much interest from us to look at the curve here with ample spread pick to cheap views - switches we have been flagging for a while now.
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