Key Takeaways
- Carrefour's CEO reports an 'unprecedented situation' in France due to riots and looting.
- The company is cutting its annual profit margin targets due to higher security costs and store closures.
- 50 Carrefour stores were directly hit by the riots, with many more closed in anticipation of unrest.
Carrefour, the French multinational retail corporation, is facing significant challenges following widespread riots and looting in France, according to the company's CEO. The CEO stated that the situation is 'unprecedented' and is impacting the company's financial outlook.
Matthieu Malige, Carrefour's finance chief, highlighted the direct costs associated with the unrest, which include several tens of millions of euros in stolen or destroyed merchandise, damaged stores, and equipment. These costs are exacerbating the company's financial strain, particularly as the key fourth-quarter trading period begins.
The unrest has also affected consumer confidence, which was already weak due to a surge in fuel prices. This has led to a reduction in footfall at Carrefour's stores, impacting overall sales. Malige noted that the company is experiencing a decline in customer traffic, with some stores forced to close earlier due to curfews.
In response to the ongoing unrest, Carrefour has had to take additional security measures, including hiring external security guards to protect its stores. These measures have further increased the company's operational costs. Malige stated that the direct costs of the unrest add up to several tens of millions of euros, highlighting the severity of the situation.
The company anticipates continued impacts in the coming weeks, with some stores forced to close earlier due to curfews. Malige emphasized that the situation is marked by deep uncertainty for customers, and the company is adapting its operations to mitigate the effects of the unrest.
France is deploying troops to address the weekend unrest, with the government admitting to failures in managing the situation. The deployment of troops is expected to provide additional security, but the long-term impact on Carrefour's operations remains uncertain.
Carrefour is now focusing on managing its costs and adapting its business model to navigate the current challenges. The company is cutting its annual profit margin targets, reflecting the significant financial impact of the unrest. Malige stated, 'In the weeks to come we will continue to be impacted as some stores have to close earlier due to curfews, and more broadly we think we’re in a new situation marked by deep uncertainty for our customers.'
The direct costs add up to several tens of millions of euros … of stolen or destroyed merchandise, damaged stores, damaged equipment, and then there are also the stores we were forced to close.
Matthieu Malige, Carrefour finance chief
