French retailer Carrefour has warned that civil unrest, widespread looting and local curfews across France could wipe up to €200 million off its full-year operating profit, forcing the company to cut its annual earnings forecasts and curb domestic capital spending.
The downgrade, delivered during an analyst call following third-quarter results on October 20, reflects the commercial toll of France’s public-order breakdown, which began in September as a student-led movement over conditions in schools and broadened into protests against the cost of living and faltering public services.
Executives described an “unprecedented situation” in the company’s domestic market, where retail operations have been disrupted by property destruction, forced early closures and rising private security costs.
Many of Carrefour’s 6,000 French stores closed during the disorder of October 17 and 18, while others hired external security guards for protection.
According to group chief executive Alexandre Bompard, roughly 50 Carrefour outlets were attacked on the initial night of unrest alone.
“Around 50 of our stores were hit on day one, many were looted and the damage is considerable,” Bompard said.
“Many of our teams and partners faced deeply distressing situations.”
While Bompard noted that the company is assisting personnel to reopen damaged branches as soon as safety conditions allow, the operational disruption extends far beyond the frontline destruction.
With a heavy domestic footprint that includes extensive convenience networks across urban centres such as Paris, Lyon and Marseille, Carrefour has been among the hardest-hit corporate operators in the country.
The scale of the disorder was nationwide. French interior minister Laurent Nuñez said hundreds of shops were looted in major cities and that about 60,000 police and gendarmes were deployed, with almost 1,000 of them injured.
More than 2,500 people were taken into custody and 67 jailed, Nuñez said, with dozens of judicial investigations under way. Overnight curfews followed in Paris and in cities including Lyon, Nice and Lille, and Prime Minister Sébastien Lecornu said further measures would be set locally by prefects in consultation with mayors.
Carrefour chief financial officer Matthieu Malige detailed the compounding financial costs facing the retailer.
“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,” Malige told reporters.
“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,” he added.
In response to the deteriorating security environment, many stores pre-emptively shuttered their doors ahead of expected disturbances, while management brought in external security guards to defend premises from vandalism.
The financial fallout has compelled Carrefour to revise its targets across key performance metrics.
Group operating profit is now projected to absorb a direct hit of between €80 million and €200 million resulting from property destruction, stolen inventory and curfew-related losses.
Adjusted earnings per share are expected to finish flat to slightly higher, discarding previous guidance that targeted high single-digit growth.
Free cash flow is now anticipated to decline year-on-year rather than post a modest gain, while domestic capital expenditure in France has been scaled back from an initial €1.7 billion allocation to €1.6 billion.
The revision came alongside third-quarter group sales of €22.69 billion, up 2.3 per cent on a like-for-like basis, with French sales rising 1.2 per cent.
Shareholders took the warning badly. Carrefour stock fell by more than 12 per cent in Paris on October 21, making it one of the heaviest fallers on the SBF 120 index.
The disruption arrives at a difficult juncture for the retail sector, landing just as stores prepared to launch major promotional campaigns ahead of Black Friday and the fourth-quarter holiday trading period.
With consumer sentiment already depressed by elevated fuel prices, the broader commercial fallout threatens to weigh on French retail footfall well into the winter.
Carrefour is also bracing for the next round of protests in France, planned on October 24, with a further mobilisation called for November 5.
