The share price of CAC 40 constituent Carrefour (FR:CA) declined by 4.5% yesterday after the CEO warned of “seeing a non-spending tsunami in France.” The company’s chairman and CEO, Alexandre Bompard, cautioned that elevated prices have compelled consumers to significantly reduce their expenditures on essential items. He also called upon the government to postpone a law that restricts the scale of promotional offers that retailers can provide.
Based in France, Carrefour is a retailer specializing in consumer goods. The company functions through an array of supermarkets, convenience stores, and hypermarkets within its network.
Tug of War
The warning came to light at a time when both retailers and the French government were already in a blame game, attributing blame to each other regarding the rise in the cost of living.
Carrefour has significantly lowered prices to attract customers in the midst of intense competition. However, the company will be unable to do this once the Descrozaille law becomes effective. This law binds retailers’ ability to negotiate and provide promotions to consumers. Under this law, the government has set a cap of 34% on promotional offers that retailers can implement on various items.
Bompard intends to suggest a delay of one year for the enforcement of the law, which is currently planned to be put into effect in March 2024.
What is the Stock Price Forecast for Carrefour?
The company has been facing the heat of high inflation and reduced consumer spending in Europe. However, the company’s numbers in its first-half earnings for 2023 mirror the effective execution of its strategy to navigate decreasing volumes in the majority of its markets. The H1 sales were up by 11.2%, with the sale of the company’s own-branded products growing to over 35% of food sales.
The shares remain volatile and have lost almost 7% in the last six months. YTD, the Carrefour share price has recorded an increase of 11% in trading.
According to TipRanks’ analyst consensus, CA stock has received a Moderate Buy rating backed by three Buy and two Hold recommendations. The Carrefour share price forecast is €21.46, which is 22.87% higher than the current price level. The price target ranges from a low of €20 to a high of €22.40.
