An analyst has questioned speculation that Carrefour, the world’s second-largest retailer, is looking to dispose of parts of its business.
The retailer is reportedly under pressure from its two activist shareholders to realise value from its hard-discount and property operations, and is on track to make a decision on what to do before the summer.
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However, Morningstar analyst Philip Gorham told just-food today (18 January) that the French retail gaint is not excessively geared, so there “is no urgent need to dispose of assets”.
Nevertheless, Gorham said he could understand why the retailer might look to dispose of some of its hard-discount stores as due to “stiff competition” from the likes of Aldi. Carrefour, Gorham said, had “struggled” in the channel.
He suggested that exiting that category, at least in markets where competition is the strongest, may allow the group to “better use elsewhere” such as “building out their City and Dia concept stores”.
Gorham said the same could be said for its property division but he questioned the timing of such a move. “Why sell in what is still a fairly illiquid market and prices remain weak from a year or two ago? Maybe the management thinks it can generate a higher return on reinvesting the capital into new stores but I suspect they will remain selective about selling property until the market improves”.
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