Financial Turmoil at Groupe Casino: Implications for the Retail Industry

2023-11-29 10:30:10
Demonstration of members of the CGT, in front of the Casino head office, in order to draw attention to the financial difficulties of the company which could endanger employment, in Saint-Etienne, June 22, 2023. JEFF PACHOUD / AFP

The uproar in mass distribution. Rothschild & Co, the investment bank of Groupe Casino, has asked candidates interested in purchasing hypermarkets and other supermarkets under the Casino brand to submit indicative offers, if possible from Wednesday November 29. This call for tenders aims to sell 400 stores compared to a total of 9,100 points of sale for a group which also manages the Monoprix, Franprix or Spar banners. The whole to be sold weighs around half of the 6% market share in France captured by the empire built by Jean-Charles Naouri, according to data from the Kantar firm.

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In a hundred-tier business, where the size effect plays a major role and where each point of market share is won with a knife, the stakes are high. While waiting for this moment, competitors have been studying Groupe Casino’s departments, locations and catchment areas from every angle for months: this dismantling appeared inevitable to specialists, while the sector as a whole is suffering from the inflation which cuts into margins and encourages customers to scrutinize labels.

The market leader, Leclerc, took the opportunity to launch the offensive on prices, like a cyclist attacking in the Col du Tourmalet. Coincidence? According to Kantar, the Breton discounter gained one point in purchases of consumer goods by French households in one year, to capture 23.3%. An exceptional gain. At the same time, number seven, Groupe Casino, burdened by its excessive debt, lost one point of market share.

Two approaches

For others, the purchase of Casino stores – even if underinvested and in formats considered less promising – constitutes an opportunity either to accelerate their good momentum, or to avoid being left behind. “I don’t think there will be a single buyer. Everyone will try to do their shopping. Because, to gain market share, the only way is to make acquisitions”judge Nicolas Champ, financial analyst at Barclays.

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Two approaches stand out. THE “big appetites”, according to the expression of a distributor, seem ready to swallow a very large part of the scope put up for sale. Intermarché is one of them. The group of independents appears all the more active since, according to several sources, it is in contact with Auchan in order to transfer to it some of the points of sale likely to be taken over from Casino. A way to defuse in advance the obstacles that could arise due to too much concentration on one area. Les Mousquetaires, Casino’s allies within a purchasing center, have already acquired 61 stores, with 70 more planned within three years, from Mr. Naouri.

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