Colruyt On the right track, but challenges remain
Last week, Colruyt published its FY24/25 results. While the results were in line with expectations, the outlook disappointed on the back of a challenging competitive environment. Despite the ongoing difficulties, we welcome the recently signed agreement to divest around 80% of its French stores. We expect that a full exit from the French market will enhance margins by around 40–50 basis points in FY26/27. Additionally, the transaction multiple is in line with market valuations. Incorporating the updated outlook and the planned divestment of the French operations into our estimates, we raise our TP from €40 to €41. As this implies a 10% upside to the current share price, we upgrade our rating from Hold to Accumulate.Etablissements FR Colruyt is engaged in wholesale, food service, distribution of fuels, production of electricity and digital printing. Co. has three operating segments: retail, which relates to stores under Co.'s own management which directly sell to retail customers and bulk consumers; wholesale and foodservice, which supplies to wholesalers, commercial customers and affiliated independent merchants; and other activities, which operates gas stations, engaged in printing and document management and provides alternative energy.
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