Carrefour to strengthen its position in Spain through acquisition of 172 stores

MarketLine   28 August 2020 (Last Updated August 28th, 2020 16:43)

French multinational retailer Carrefour has agreed to acquire 172 stores under the Supersol banner in Spain, which will consolidate its position in the market.

Carrefour to strengthen its position in Spain through acquisition of 172 stores

French multinational retailer Carrefour has agreed to acquire 172 stores under the Supersol banner in Spain, which will consolidate its position in the market.

The sale, which is expected to be completed in 2021 will see Carrefour gain control of Supersol’s convenience stores and supermarkets, which are located mainly in Andalusia and the Madrid region of Spain. The enterprise value of the transaction is €78m ($92.18m).

Carrefour plans to convert the acquired stores to the convenience, supermarket and Supeco formats. Its most recent acquisition will allow Carrefour to consolidate its position in Spain by diversifying its store network and strengthening its presence in growth formats.

The company has also stated that the acquisition will help it expand its home delivery capability.

Carrefour has turned to overseas markets to drive growth

Carrefour’s French segment reported revenue of €34,765m for FY2019, which decreased 2.4% YoY, and recorded negative growth of 1% during 2016-19. This segment accounted for 48.0% of the company’s revenue in FY2019, therefore it has recently looked further afield to drive growth.

In June 2020, the company entered into an agreement to acquire 100% stake in Wellcome Taiwan Co. Ltd from Dairy Farm International. This acquisition consists of 224 proximity stores and helps the company to accelerate its proximity store format development in Taiwan and the Asia-Pacific region.

Earlier, in February 2020, the company signed an agreement with Makro Atacadista SA to acquire 30 cash and carry stores in Brazil. These 30 stores cover an area of 165,000 square metres of sales area, which has helped the company to enhance its growing Atacadao format model. The company expects to increase its sales by 60% and optimise cost structure.

Acquisition follows successful navigation of the Covid-19 pandemic

Carrefour has been better placed than many retailers to cope with the effects of Covid-19, due to the fact that almost all of its physical stores have remained operational during lockdown and its well-established online platforms have proved vital in supporting the retailer’s sales performance.

Carrefour is heavily dependent on European markets with the majority of its stores present in countries such as France, Italy, and Spain that have now all become hotspots of the Covid-19 outbreak. This exposure has been advantageous for the grocer as lockdown measures have led to stockpiling and bulk buying – fueling volume growth and average transaction values across both physical and online channels.

However, growth has not been limited to Europe, Carrefour Brazil’s online sales grew by 235% in the Q1 2020, with the number of online orders reaching a record high of 4,269 per day, compared with an average of 1,674 orders, a year ago. This pick up in online demand will benefit Carrefour’s long term digital strategy.

Its positive performance amid the Covid-19 pandemic has positioned the company in a strong position, allowing it to continue with its international expansion and drive growth.