Carrefour SA warned that the social unrest roiling France will drag on its earnings this year, the first sign of the economic impact from riots in Paris and other cities last weekend. The grocer cut its profit outlook and other annual financial targets, sending its shares plunging by as much as 15% in Paris trading on Wednesday, the biggest intraday decline since 2017.
"There is a high degree of uncertainty regarding consumer spending trends and the conditions under which our stores will be able to open," Chief Executive Officer Alexandre Bompard said late Tuesday, describing the situation in France as unprecedented. More evidence of the effect on businesses may emerge when retailer Fnac Darty and luxury groups Hermes International SCA and Kering SA publish sales figures this week.
Cost-of-living protests that drew more than half a million people across France turned violent over the weekend as fast-moving groups targeted hundreds of shops, smashing windows and looting merchandise. While the turmoil has abated after curfews were imposed, protesters have called for another day of unrest on Saturday. Carrefour is the first retailer to disclose the financial impact of the riots, and likely one of the most affected because of its city-center and suburban shops in Paris and other towns.
Bloomberg Intelligence analyst Charles Allen wrote that weaker sales from an extended period of reduced store hours would push the profit shortfall into high single digits. About 50 Carrefour stores were hit on the first day of rioting, with many looted and badly damaged, Bompard told analysts. Carrefour sees a maximum possible impact on profitability of around €200 million ($225 million). The ultimate hit to French growth will depend on how long disruption lasts, according to ING economist Charlotte de Montpellier.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing