EUR 850.00 For Business Accounts Only

Morningstar | Casino Underperforms in France in 1Q, Confirms Annual Guidance; Shares Fairly Valued

Casino Group reported a first-quarter sales update with group sales up 3.0% on a same-store basis (4.3% organic growth), in line with our annual expectations. Management confirmed its annual guidance (10% trading profit growth excluding property, EUR 500 million free cash flow in France before dividends and financial expenses, Latin America and Cdiscount EBITDA margin improvement). Given this mostly in-line print, we maintain our no-moat rating and EUR 32 fair value estimate.

French retail sales were flat on a same-store basis (versus up 1% for Carrefour in France), with Monoprix and Casino Supermarkets being flat like for like, a notable underperformance relative to Carrefour's 1.5% like for like in supermarkets. In contrast, like-for-like sales in convenience and Geant hypermarkets were up 3.6% and 0.3%, respectively, versus 2.6% and flat for Carrefour's French convenience and hypermarkets in the quarter.

In Brazil, GPA Food's (more than 70% of Latin American sales) same-store sales were up 7.1% (versus 6.6% for Carrefour's Brazilian retail operations for the same period), with Assai (close to half of GPA Food sales) growing 10.3% like for like and 25.8% on an organic basis.

In food, a category with scope to create higher customer loyalty in today's undifferentiated grocery market, gross sales (excluding calendar effects) for Casino Group were slightly negative, down 0.2% compared with positive 2% like-for-like growth in food sales for Carrefour. On the contrary, in nonfood, Casino Group through its Cdiscount business outperformed with positive 6.1% gross sales (excluding calendar effects) growth versus a 5.4% like-for-like sales decline for Carrefour.