Skip to content

Carrefour's Attractive Profits Fueled by Latin America's Expansion

Global retail giant Carrefour, with its footprint spanning over 15,000 stores, offers essential goods in over 40 nations. Discover my reasons for recommending a purchase of CRRFY shares.

Carrefour Gains Appealing Profits Bolstered by Growth Across Latin America
Carrefour Gains Appealing Profits Bolstered by Growth Across Latin America

Carrefour's Attractive Profits Fueled by Latin America's Expansion

In the retail sector, Carrefour, the French multinational corporation, presents a complex investment landscape with promising growth opportunities and potential hurdles.

Carrefour's first-quarter sales for 2025 saw a significant boost, rising by 2.9% on a like-for-like basis. This growth was primarily driven by strong performances in Brazil and an improving trend in France, signalling some momentum for the company. Despite a 1.7% decline in like-for-like sales in its home market, France, Carrefour's resilient consumer spending on essentials like groceries has kept sales moving, with forecasts predicting a modest 0.7% annual growth in 2025.

The company's focus on organic growth as a standalone entity, without pursuing major acquisitions, is a strategic move that may reduce integration risks. This approach is evident in Carrefour's recent acquisition of 172 Supersol stores in Spain, which strengthens its position in that market.

Investors are attracted to Carrefour's robust dividend yield of 7.78%, with a payout ratio near 83%. This makes the company an appealing choice for income-focused investors. Carrefour has also confirmed its 2025 financial targets for slightly increased EBITDA, recurring operating income, and net free cash flow, indicating management confidence in the business outlook.

However, Carrefour faces several challenges. The company is implementing a €1.2 billion cost-saving plan to fund price cuts, which could pressure margins if not executed effectively. Carrefour shares hit a 52-week low in February 2025, reflecting investor concerns about near-term performance and strategic challenges. The company is reportedly negotiating an exit from the Italian market, part of a broader strategy to rationalise its global presence and focus on core markets after years of losses and underperformance in Italy.

Despite these challenges, Carrefour's stock trades at a forward P/E of about 14x, which is below the sector average of 18x, suggesting potential valuation upside if operational execution improves and market conditions stabilise. Carrefour's net debt to enterprise value is only 30%, and the company operates over 15,000 stores in more than 40 countries.

In conclusion, Carrefour offers a mixed investment outlook with stable income appeal via its dividend, some growth prospects in key markets like Brazil and Spain, and a strategic focus on core markets. However, investors should weigh Carrefour's resilient essentials-oriented business model and valuation appeal against the operational risks and recent share price weakness.

Personal finance investors might find Carrefour's robust dividend yield of 7.78% appealing, especially given its payout ratio near 83%. Additionally, savvy business investors could seize the growth opportunities presented in Carrefour's key markets, such as Brazil and Spain. However, potential hurdles like operational risks, near-term performance concerns, and strategic challenges should also be taken into account while considering personal-finance or business investments in Carrefour.

Read also:

    Latest