French retail giant Carrefour (EPA:CARR) and its Greek franchisee Retail & More, led by CEO Vassilis Stassinoulias, unveiled their plans to reestablish the Carrefour brand in Bulgaria via a sub-franchising strategy. The strategy includes at least 20 stores and is currently in negotiation with Bulgarian firms such as Parkmart Holding, a luxury food product retailer founded by Dobromir Andonov.
Following these negotiations, several Parkmart stores located in Sofia, Varna, and Burgas are scheduled to transition to the Carrefour brand. This expansion into Bulgaria aligns with Carrefour's ambitious goal of entering ten new franchise markets by 2026.
Retail & More, the Greek franchisee under AVE Group and Carrefour franchisee since 2022, is spearheading the Bulgarian expansion. Concurrently, Retail & More is also planning to launch 50 Carrefour stores in Greece.
Patrick Lasfargues will oversee the rebranding of the Parkmart stores in Sofia, Varna, and Burgas into Carrefour Market and Express outlets over the coming months. This move comes as part of Carrefour's expansion strategy which was initially set in motion when Retail & More was established in Greece in 2021 to take over Carrefour's master franchise.
Carrefour's previous foray into the Bulgarian market was through KMB, a unit of Marinopoulos Group, back in 2009. However, this venture faced bankruptcy in 2016 following a failed merger with AP Mart's Piccadilly supermarket chain and accumulated losses of 183 million levs ($100.1 million/93.6 million euro) since 2011.
Despite this setback and current inflationary pressures, Carrefour posted a Q3 sales growth of 23.6 billion euro ($25.3 billion) in 2023. Last month, Carrefour further expanded its European presence by completing its acquisition of Belgian retailer Louis Delhaize's Cora hypermarkets and stores in Romania.
InvestingPro Insights
As Carrefour ventures back into the Bulgarian market, it's worth taking a look at some key InvestingPro metrics and tips.
InvestingPro data reveals that Carrefour (CARR) has a perfect Piotroski Score of 9, indicating a very healthy financial situation. This is further supported by the company's high earnings quality, with free cash flow consistently exceeding net income. This strong earnings performance should allow management to continue their dividend payments, a practice they've maintained for an impressive 32 consecutive years.
In terms of valuation, Carrefour is trading at a low P/E ratio relative to its near-term earnings growth, and at a low revenue valuation multiple. This suggests that the stock may be undervalued, offering potential upside for investors.
Moreover, it's worth noting that Carrefour is a prominent player in the Consumer Staples Distribution & Retail industry. This, alongside the fact that analysts predict the company will be profitable this year, adds to the company's appeal.
In addition, InvestingPro offers a wealth of further tips and insights for Carrefour and many other companies. For example, there are currently 14 additional InvestingPro Tips available for Carrefour, providing even more in-depth analysis.
In conclusion, as Carrefour embarks on its Bulgarian expansion, it appears to be in a strong financial position with promising prospects. This, coupled with its undervalued status, suggests it could be a compelling opportunity for investors.
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