24 mei 2022
11:56
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‘After 20 years, Colruyt is still loss-making in France and recent acquisitions in fitness, textiles and cycling raise many questions,’ it sounds from the City of London.
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Colruyt . tumbles on the Brussels stock exchange
again to 5 percent lower to 29.44 euros, the lowest price since April 2012. Since Colruyt predicted a lower profit in June last year, the stock market value has been capped by 3 billion, to 4 billion euros (see chart).
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The reason is a critical report from the London stockbroker Barclays, the latest salvo in a years of critical reports from the City of London about the largest Belgian supermarket chain.
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Barclays analyst Nicolas Champ maintains his sell recommendation and lowers the price target to 29 euros. He looks forward with some trepidation to the publication of the results for the financial year up to March 31, on June 14. Not so much in terms of the figures themselves, since CEO Jef Colruyt already warned for a ‘significantly lower’ profit. Champ expects 304 million net profit, from 384 million a year earlier.
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The problem, however, is the current fiscal year. “We don’t believe in the Bloomberg consensus, which still predicts a 10 percent earnings recovery,” Champ said. He points to the combination of high cost inflation – due to automatic wage indexation in our country – and the competitive price war to save consumers, especially with stiff competition from Ahold Delhaize.
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More fundamentally, the analyst wonders where the future growth should come today. ‘In our own country, margins in the core activity, food retail, are under pressure and there are few opportunities for growth in view of the market share.’
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At the same time, Champ questions the strategy. ‘After 20 years, Colruyt is still loss-making in France and the recent tactical takeovers in widely divergent sectors such as fitness, online pharmacies, clothing– of bicycle chains mainly raise questions. This in view of the limited synergies with the core activity and the lack of information about the profitability of those activities.’
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We wonder whether Colruyt would not benefit from a new generation of managers.
