Carrefour Sa S/Adr

Good day and thank you for standing by. Welcome to the CAFWA Q3 2026 sales webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speakers today, Mr. Alexandre Bompard, Chairman and CEO, and Mr. Matthieu Malige, CFO. Please go ahead.

Thank you. Good evening, everyone, and thank you for joining our Q3 sales call. I was not originally scheduled to join this call, but given the scale, On the seriousness of the events in France over the past few days and their consequences for our business and our teams, I felt it was important to speak to you directly. I want to begin by addressing what happened over the weekend. Thousands of stores across France were attacked, products robbed, and for some stores, equipment was destroyed. As chairman of the French Retail Federation, I'm following the situation across the sector and its consequences for retailers throughout the country. As we speak tonight, the situation keeps evolving. After Saturday's demonstration on looting, there were more riots on Sunday than new threats yesterday. Carrefour was directly and strongly affected. Around 50 of our stores were hit on day one. Many were looted and the damage is considerable. In this context, our first concern is the safety of our colleagues, franchises and customers. Many of our teams and partners faced deeply distressing situations. I want to express my solidarity with them. Our store teams have once again shown great courage and dignity. We are supporting them on helping the affected stores resume operations as soon as it is safe. We are also working with our teams on franchise partners on insurance coverage and the claims process. The direct costs are only part of the impact. Those that were not physically damaged are also affected. Lower customer footfall in many areas, shorter opening hours because of curfews, precautionary closures, and access difficulties are disrupting trading. This is continuing in some areas at the beginning of this week. Going forward, we will have to increase our operating costs Notably in areas such as security and specific logistics for damaged stores. As you understand, the situation is unprecedented on the level of uncertainties very high on operations and trading. The government announced security measures including curfew at the local level. New demonstrations are announced notably for October 24 on November 5. So it's impossible to get a clear picture of the situation. This happens after a cycle of more difficult consumption since mid-September on the back of higher energy prices, social unrest from high school students, and the deteriorated climate on the 2027 budget with more taxes and less subsidies. We are entering a crucial period for retail. The final month of the year traditionally accounts for more than a third of Carrefour France's full-year recurring operating income. We expect the severity of the security situation all over France to further weaken consumer confidence and weigh significantly on spending while imposing increasing operating costs just to keep our stores open. Our Q3 commercial momentum was solid and in line with expectations. However, the events of the past few days have changed the outlook for the final months of the year. We estimated it was our responsibility to revise our 2026 targets as set out in our press release. These revised targets keep showing profit growth versus 2025, but at a lower level. Carrefour has a solid business model, a strong local footprint, and committed teams. Our response will be driven by clear execution priorities. We will continue to strengthen our price competitiveness, to support customer value and loyalty, accelerate the development of our convenience format on e-commerce, and pursue our 1 billion cost savings plan with discipline. We will also keep advancing Carrefour 2030, We are confident that these priorities will help us manage the current disruption, deliver our revised 2026 objectives, and continue building the Group's long-term growth. I will now leave Matthieu to comment on our Q3 performance and explain the revised targets in detail.

Thank you, Alexandre, and good evening to all of you. Let me start with a few key highlights from this Q3. Group sales increased by 2.3% like for like, following plus 2.1% in H1. Growth was driven by food sales of 2.7% and the positive contribution from the three core countries. These results came in a context of solid consumer momentum in Europe over the summer, despite a rebound in general inflation weighing on purchasing power, whilst food inflation remained contained. In Latin America, consumption remained under pressure and was notably penalized in Brazil by high interest rates. In France, sales grew by 1.2% like for like, with further improvement in price competitiveness. In Spain, sales rose by 2.1%, supported by volume growth and a strong momentum in convenience. In Brazil, sales grew by 1.4% with Atacadao accelerating its volume trends way above the market. We continue to roll out our Carrefour 2030 priorities. Carrefour kept expanding in growth formats over the quarter, notably with 89 new convenience stores in France and Spain, and two Atacada openings in Brazil. The vision solution is now deployed in 28 hypermarkets. E-commerce grew by 18% in Q3, and we also continue to deliver our cost savings plan in line with our €1 billion target for 2026. Overall, Q3 sales were solid and in line with our expectations. As Alexandre has just explained, recent events in France have changed the outlook for the final months of the year. We have therefore adjusted our 2026 financial targets. I will explain the revised numbers in more detail at the end of the presentation. Let me take you to our Q3 numbers with the sales bridge in slide 3 of the presentation. Group sales reached 22.7 billion euros, up 3.9% on a reported basis. Like-for-like sales grew plus 2.3% in line with H1. The scope and M&A effect was negative 0.7% over the quarter, mainly reflecting the sale of six hypermarkets in France, in line with the commitments made to the competition authority following the acquisition of Cora and Match. Petrol contributed 1.3 percentage points, while the calendar effect was negative 0.2%. Foreign Exchange had a positive impact of plus 1.2% over the quarter mainly reflecting the appreciation of the Brazilian Real. Let me now turn to France. Sales grew by 1.2% like for like in Q3 with positive growth across all formats. The food retail market continued to grow both in value and volume and our food sales were up 1.6%. Our price investment continued to improve our competitiveness and our price image, contributing to a two-point increase in net promoter score. Trading was stronger over the summer, then we saw a slowdown in September. In this context of slowdown on consumption, the Carrefour anniversary campaign did not deliver the usual uplift this year. Former Cora stores grew by 7.3% L4L after 5% in Q2 and 2.3% in Q1. Match stores were up 3.4%. This shows continued progress. The commercial effects of last year pricing and assortment reset are gaining momentum. Cora is continuously gaining customers and market share. We look forward to accelerating the dynamic further in Q4, despite the new context. E-commerce grew by 15%, with further market share gains in drive and home delivery. We opened 54 convenience stores during the quarter. Finally, yesterday, we announced that we had signed an agreement for the acquisition of Côte-de-France. This transaction is part of our Carrefour 2030 plan for France, which aims to strengthen our market share partly through tactical M&A, consolidate our leadership in the convenience segment and improve our EBIT margin. Let's now turn to slide 5 and Spain where the market remains solid and mainly driven by volume growth. Carrefour Spain continued to post solid sales growth up 2.1% like for like in Q3 in line with the previous quarters. Momentum remained positive in both food and non-food with sales up 1.8% L4L in food and 3.2% L4L in non-food. Convenience continued to be a strong growth format with L4L sales up 13% and continued network expansion with 35 openings over the quarter. Commercially, our mi-channel strategy is also paying off with e-commerce up 8%. Finally, customer satisfaction continued to improve with NPS up 2 points in Q3, driven by our sustained commitment to price leadership in the country, supporting consumer purchasing power. Now turning to slide 6 and our operations in Brazil. The Brazilian market remained challenging over the quarter. High interest rates and weaker consumer sentiment continued to weigh on purchasing power. Despite a more favorable comparison base, as volumes declined mid-singer digits in Q3 last year, volumes kept declining this quarter in both cash and carry and retail markets. Against this backdrop, Carrefour Brazil posted plus 1.4% L4L sales growth in Q3, with food sales growth accelerating to 2.2% from 0.7% last quarter. This was notably driven by Atacadao, which grew 2% like for like, accelerating from 0.5% in Q2 and negative 1% in Q1. Atacadao's volume trends clearly improved, and it accelerated its market share gain. The adaptation of Atacadao's commercial model with a simplified assortment, targeted commercial initiatives and the rapid rollout of the Bullnus private label, with 300 SKUs now available, all this resonated well with customers. The retail segment posted food sales up 1.5% like for like. As in previous quarters, non-food sales were penalized by the discontinuation of the non-food e-commerce activity, which was not profitable. Sam's Club delivered plus 3.6% like-for-like growth driven by positive volumes and an increase in active members. Moving to the other countries segments on slide seven. In Belgium, Carrefour recorded the third straight quarter of improvement in like-for-like sales growth at plus 2.3%. outlining a solid commercial momentum driven by positive volumes. Market share was up 20 bps over the quarter, supported by a successful combination between investment in price competitiveness, promotions, and loyalty benefits. In Poland, the market was penalized by food deflation for the first time in 10 years. Sales were down minus 4.3% like following. In Argentina, sales grew by 24% like for like. Despite continued pressure on consumer purchasing power, we consolidated our market leadership and gained market share in both value and volume. Volumes have remained positive since June, clearly outperforming the market. Now let's turn to slide 8, which outlines the adjustments to our financial targets for the full year 2026. The social and security situation in France has deteriorated and is expected to remain under pressure for some time. We expect this to weigh significantly on consumption and disrupt operations in our stores through the end of the year, which is a critical period for our activity. Against this backdrop, we have decided to pause or delay a number of works in our stores to be totally focused on operations and servicing our customers. Consequently, our capex envelope for the year is reduced by 100 million euros to 1.6 billion from 1.7 billion initially. In this context, the Group is adjusting its guidance for 2026. We continue to expect growth in recurring operating income. We now expect operating margin to increase by 0 to 15 basis points compared with our initial target of 25 basis points increase. We now expect adjusted earnings pressure to be stable or show slight growth We expect net free cash flow to slightly decrease whereas we had previously expected slight growth. I will not comment page 9 with key takeaways which summarizes what we just discussed and is here for your reference. I thank you for your attention. Alexandre and I are happy to take your questions.