Carrefour plans share buyback
Carrefour SA plans to buy back shares for the first time in a decade, showing confidence in its turnaround plan.
Europe’s biggest food retailer, whose potential takeover by Canada’s Alimentation Couche-Tard Inc unravelled earlier this year following opposition from Paris, said it would buy back up to €500 million ($601 million) of shares this year.
“Our share buyback programme is yet another sign of our confidence in the future and our ability to generate cash, a confidence renewed by our very good commercial performance in France,” chairman and CEO Alexandre Bompard told analysts, as the company kept all its financial and operational targets under its ‘Carrefour 2022’ strategic plan.
Carrefour, which last month agreed to buy Brazil’s third-biggest food retailer Grupo BIG Brasil SA, confirmed a goal to seek €2.4 billion in cost savings on an annual basis by 2023 and annual net free cash flow above €1 billion from 2021.
Finance chief Matthieu Malige told analysts Carrefour had a strong balance sheet and further buybacks next year could not be ruled out.
He added the cash flow goal was based on the assumption 2021 core earnings (EBITDA) would rise from 2020.
First quarter sales reached €18.56 billion, marking like-for-like growth of 4.2% and reflecting robust food sales in key markets of Brazil, France and Spain.
In France alone, sales growth was 3.5%, outperforming the market in hypermarkets, supermarkets, convenience and the Drive click and collect business.
“France made huge efforts to come back into the game. I am confident we can increase the satisfaction level,” Bompard said of the company’s goal to put customer satisfaction at the heart of its commercial initiatives.
By early April, with new coronavirus lockdown measures in place in France — although less strict than in previous lockdowns — growth remained solid, including in hypermarkets.
Carrefour and food retailers worldwide have benefited in the pandemic as lockdowns have forced people to eat at home.
The retailer is in the midst of a fiveyear plan launched in January 2018 to cut costs and boost e-commerce investment to fend off competition from Amazon.com Inc.