Carrefour Analysis, 2nd Qtr

I have now had time to look into the half year results and also to listen to Georges Plassat and his rambling strategy outline. I think its clear that Carrefour is struggling, but it has some outstanding growth areas, which have inf act protected it from the EU downturn. Latin America and China are huge growth areas, but a hidden gem is the financial services. Carrefour is moving towards a banking division and that division is returning some 25% of ROI. In this they are ahead of their competitors.

Georges clearly wants to convince people that he has the right ideas without giving away too much. One thing that came out clearly is he is against the whole concept of "Carrefour products". He specifically says that they hired a UK brand manager who desperately tried to emulate the success of own brands in the UK. But he seems set against this, his point being that real brands are much better for customers, and that "own brands" tend then to be the low cost items and get a poor reputation. He also seems to be against the sale in store of a lot of hard items, saying that from his perspective they have taken over from the core of a supermarket, and reduced the quality and choice. Having said that he is for the "hypermarket" concept, but thinks it must be much better managed. He clearly doesn't like customers coming to see products and then buying them online. While it sounds amusing (The FT makes joke of it), he spent time saying if we sell clothes we must have changing rooms, we cannot have people wandering about naked. I don't think he was joking, I think he was making the point that the company has not thought out the right way to do things. He made a lot of focus on providing good online services.

I came away with the feeling that he is canny and does not want to give much away, but has to convince big shareholders. He focused on debt reduction and simplicity and clarity of product offerings. I heard nothing to make my thesis that the shares are oversold faulty. I think it may take him a good year or two, but then by then the shares will be priced for that. If you want to take advantage now is the time.