Carrefour in talks to sell Italy business, reports revenue growth

Carrefour is in exclusive talks to divest its loss-making Italian business, which recorded a €67 million operating loss last year, to NewPrinces Group as part of a strategic review, with potential finalization by late 2025. Concurrently, the European retailer reported a significant acceleration in second-quarter like-for-like sales growth to 4.4%, up from 2.9% in Q1, driven by price cuts that boosted performance, notably a 2.1% increase in its crucial French market. This dual development signals Carrefour's strategic focus on portfolio optimization and a positive shift in its core operational momentum, with first-half sales totaling 46.559 billion euros.

Analysis

Carrefour is demonstrating a clear two-pronged strategy focused on portfolio optimization and strengthening core market performance. The exclusive talks to divest its Italian business, which generated a substantial €67 million operating loss last year, signals a decisive move to shed underperforming assets and improve overall profitability. While the deal's finalization is targeted for the end of 2025 and remains subject to approvals, it represents a significant step in the company's strategic review. Concurrently, Carrefour reported an acceleration in organic growth, with Q2 like-for-like sales increasing by 4.4%, a notable uptick from 2.9% in Q1. This growth is attributed to successful price-cutting initiatives that are resonating with inflation-sensitive consumers, highlighted by the critical return to growth in its primary French market, where like-for-like sales rose 2.1% for the first time since 2023. The increase in first-half sales to €46.559 billion underscores the positive momentum in its core geographies of France, Spain, and Brazil, validating management's current operational focus.

Key Decisions for Investors

• The concurrent news of divesting a loss-making unit while accelerating sales growth in core markets suggests management's strategic plan is gaining traction, warranting a potentially more constructive outlook on the stock.
• Investors should closely monitor the sustainability of the 2.1% like-for-like sales growth in the crucial French market, as continued momentum here is a key catalyst for the company's performance.
• While the proposed sale of the Italian business is a long-term positive, investors should factor in the extended timeline to late 2025 and potential risks related to regulatory and union consultations that could impact the transaction.