Carrefour needs to skinny down and focus

Carrefour S.A. is one of the world’s 10-largest retailers, whose $125 billion in annual revenues are about two-and-ahalf times those of CoucheTard.

Yet Carrefour (“crossroads” in English) is also ailing.

The past decade has been humbling for Carrefour, a pioneering firm that gained a lead of at least two decades over its North American peers in big-box superstores (hypermarches), selling groceries alongside general merchandise, and experimenting with e-commerce as early as 2000.

More recently, though, Carrefour has surrendered market share in France, which still accounts for about half of total sales, to discount grocers and rival online merchants.

Carrefour has lost focus, with five different store types, numbering 12,775 in total, located in more than 30 countries. Carrefour stock has lost more than half its value since 2015.

Total revenues have dropped in each of the past three fiscal years, or 8.4 per cent since 2017.

Turnaround CEO Alexandre Bompard has made some progress with long-overdue cost controls, turning Carrefour’s losses in 2017 and 2018 into a $1.7-billion profit in its latest fiscal year.

But that’s still far shy of Couche-Tard’s $2.4-billion profit last year on a fraction of Carrefour’s sales.

A meaningful turnaround at Carrefour might require it to divest some or most of its hypermarket, supermarket, cash and carry, neighbourhood micro-store and convenience store divisions, with CoucheTard an obvious buyer for the C-stores.