REAL-TIME GLOBAL RESEARCH
Carrefour: Fundamentals vs positioning; Reiterate UW
Key takeaways
- Earlier in October, we previewed 3Q (Struggling with the Bull Case), stating that we believe it is unlikely to show any signs of inflection.
- Our view remains the same: Spain remains the only bright spot for the company;
- Cora is helping market share and LFLs but remains a margin/profit drag for France, whilst the core is yet to inflect in underlying terms; Brazil remains under pressure, with negative volumes denting margins; the rest of
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Research evidence excerpt
Fundamentals vs positioning; Reiterate UW
Reiterate UW into 3Q26. Earlier in October, we previewed 3Q (Struggling with the Bull Case), stating that we believe it is unlikely to show any signs of inflection.
Our view remains the same: Spain remains the only bright spot for the company;
Cora is helping market share and LFLs but remains a margin/profit drag for France, whilst the core is yet to inflect in underlying terms; Brazil remains under pressure, with negative volumes denting margins; the rest of Europe isn’t great either (with industry data and peer read-across particularly bearish for Poland & Belgium). We model relatively flat LFLs from 2Q to 3Q (i.e. implying an underlying slowdown on easier comps), with France at 1.3%, Spain at 1.8% and Brazil at c2%.
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Consensus is drifting lower. LFL sellside and buyside expectations have been trimmed into 3Q, but not the implied 2H profit estimates. This poses a risk into y-e, should the subdued trends continue. We also note the market has consistently been falling short of total revenue and organic growth expectations for the company.
Olivia Petronilho - Specialist Sales European Consumer (44-20) 3493-3709 Share outperformance and investor positioning continue to imply a positive inflection in the equity story (+19% YTD, +27% in 1Y), despite (i) 1H26 proving to be a downgrade event as we had expected, (ii) recent market share going backwards implying a rather sluggish 3Q trading outlook, and (iii) a demanding implied 2H/FY bar. We sit 5% below France EBIT (20bps below on margins), 9% below on group EBIT and 11% below on EPS in 2H26, sitting HSD% below on the FY outcome as well. Hence, we again see a risk for disappointment and the need for expectations to reset.
We separately remind investors that the quality of earnings and cash flow has
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