[ad_1]
© Reuters. FILE PHOTO: The logo of Carrefour is seen at a Carrefour Hypermarket store in Nice, France, February 21, 2022. REUTERS/Eric Gaillard
By Dominique Vidalon
PARIS (Reuters) -Carrefour will step up its expansion in e-commerce, open more discount stores and cut costs as part of boss Alexandre Bompard’s new strategy to accelerate the turnaround at Europe’s largest food retailer amid soaring inflation.
The French group, which also announced a media joint venture with ad giant Publicis, said on Tuesday it was aiming for 4 billion euros ($4 billion) in cost savings and for net free cash flow of over 1.7 billion euros ($1.7 billion) in 2026.
That will allow Carrefour (EPA:) to pay a cash dividend and increase it by at least 5% per year, while continuing a share buyback policy started in 2021 and seize medium-sized acquisition opportunities, the group said.
To help customers with the soaring cost of living, it vowed to boost the share of private label products in its food sales to 40% in 2026 from 33% in 2022 and to accelerate expansion of discount stores in its key French and Brazilian markets.
As a result, Carrefour said it was raising its annual investment target to 2.0 billion euros from 1.7 billion euros previously.
“Carrefour 2026 is a plan to be on the offensive in markets marked by inflation and climate change … Confident in the strength of our model, we will invest more in our business and stores, while significantly improving cash flow generation,” Chairman and CEO Alexandre Bompard said in a statement.
At 0730 GMT, Carrefour shares were down 1.3% at 16.35 euros.
“Today’s strategy is concerning given the focus on expansion (more stores, more Capex) without taking the action required to simplify the group through market disposals, space reduction and price competitiveness,” said Bernstein analysts.
Bompard, who took the helm in July 2017, was reappointed in May 2021 for another three years.
He faces the challenge of delivering the second leg of the group’s turnaround amid an inflationary environment made worse by the war in Ukraine and without the extra financial resources that would have been on hand if two planned tie-ups last year had not failed – one with Canada’s Alimentation Couche-Tard and another with France’s Auchan.
The new plan builds on targets announced in November 2021 to triple e-commerce Gross Merchandise Value (GMV) – or the total value of merchandise sold – to 10 billion euros in 2026, contributing an extra 200 million euros to recurring operating income in 2026 versus 2021 as Carrefour looks to stay ahead of Amazon (NASDAQ:) on grocery delivery.
The partnership with Publicis in retail media will take the form of a joint venture in which Carrefour will hold a 51% stake, the group said.
($1 = 0.9996 euros)
[ad_2]
Image and article originally from www.investing.com. Read the original article here.