Following what it called Carrefour’s “disappointing” fourth quarter trading update, Citigroup has revised down its sales, margin and EPS assumptions for the next three years for the French retailer.

In a research note Citigroup said: “Slower-than-expected sales growth and lower guidance on French margins drive a 2.5% cut in this year’s EPS forecast of now €2.48 down from €2.53.”

The investment bank’s analysts said that net sales are likely to be around €74.9bn this year, over €230m below its previous forecasts mainly driven by a significant shortfall in French hypermarkets.

The note said that as industry margins are coming down in France, this shortfall in sales growth comes despite price investments at Carrefour in the order of €350m.

It added: “We have been arguing for some time that Carrefour has put its gross margin in the hands of competitors when it declared to aim for price leadership ‘at whatever cost’.

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“In our view there is no visibility as to how much more industry margins will be falling in France – Carrefour’s need to revise guidance on margins seems to support this view.

“In view of lower sales growth this year and anecdotal evidence that suppliers declined to extend their support to retailers and raised prices this year instead, we have also revised our margin assumptions for France for 2006 and 2007.”