This Tuesday, May 10, at 9:45 a.m., the atmosphere is still very friendly in the superb premises of the Maison de la chimie, in Paris. The small shareholders of the Casino group who come to attend the annual general meeting of the company take advantage of the coffee offered to them. The tone is jovial, everyone is happy to meet again after two years of video conferencing. But, already, we are discussing the subjects on the agenda, one of which is particularly noteworthy: resolution number 6 plans to increase the fixed remuneration of the CEO to 825,000 euros per year, against 480,000 currently. Admittedly, the salary of Jean-Charles Naouri was so far much lower than that of his peers, but, while the distributor has not paid the slightest dividend for three years, the idea makes some people tick.
The AG that follows will prove otherwise more stormy. Hisses in the room, calls for resignation, tough questions… In a rather unusual disorder, reassembled small investors will express, very vigorously, their dissatisfaction with the performance of the company. Without direct consequence for the boss: as the majority shareholder, his increase will be voted, by a very large majority moreover (97.17%).
Looking at the group’s results, few elements justify such a reward. Admittedly, global sales started to rise again in the first quarter of 2022, but they continued to crumble in France. Although French activity picked up a little in April, the longer-term balance sheet remains very negative. Since 2018, turnover in France has shrunk by 5 billion euros, to reach 14.1 billion in 2021. Last year, after favorable confinements in 2020, it fell heavily by 5.4 % (on a like-for-like basis) and all the brands were down: Casino, Géant, but also Franprix and even Monoprix.
At the same time, the debt continued to swell, to 5 billion euros, and the losses continued (530 million euros in 2021). The company, which had promised a return to profitability, even had to publish a profit alert at the end of January. The Stock Exchange did not appreciate and Casino shares fell. In five years, its value has gone from 56.70 to 16.40 euros. Could it be the fault of the health crisis? The absence of tourists in the streets of Paris certainly weighed, but from there to explain everything… “Food distribution performed very well in 2020 and 2021, notes Christine Kam, credit analyst at Octo Finances. If Casino does not manage to be profitable over these years, it is to wonder when it will be able to.
Jean-Charles Naouri may see his talent turning against him. Since its beginnings in 1992, this virtuoso of finance has been able to build a giant of commerce without too many starting funds. Via clever arrangements, he bought his brands step by step, relying on a cascade of holding companies (Euris, Finatis, Rallye). But now, heavily indebted and in the sights of hedge funds, the group was forced in 2018 to set up a vast program of asset disposals (stores in particular) and a major savings plan.
A financial rescue that penalizes business. The grocer saw its cumulative market share plummet from 11.5% in 2017 to 7.7% at the end of 2021, according to research firm Kantar Worldpanel. In the first quarter of 2022, it was even doubled by Lidl! A demotion that the distributor owes, of course, to the reduction of its fleet, but also to a loss of attractiveness of its brands. “Wanting to free up cash, the group has degraded its commercial proposal”, summarizes Olivier Dauvers, specialist in the sector.
First, from Paris to Nice via Toulouse, the same observation is clear: a slew of stores are sorely lacking in investment. At the Casino d’Asnières-sur-Seine (92), it’s hard to walk around in your trolley without noticing the jumps in the aging tiles and the sadness of the lighting. Apart from the health and beauty section, where large lampshades create a cozy corner, the rest of the aisles are hard to see.
By spacing out the renovations further, cutting back on a lick of paint, changing the lights or a fridge, the group was able to save a few million euros, but its stores have lost in sex appeal. “The state of Géant and Casino is now far below Leclerc or Intermarché,” said expert Olivier Dauvers. Results ? When these competitors are able to capture customers for miles around, the group’s points of sale struggle to attract beyond their immediate catchment area. And sales are affected. Thus, a Giant displays a return twice lower than that of a Leclerc, with only 6,000 euros in turnover per square meter, against 12,000 euros for its rival.
The decor is not the only cause: the labels weigh too. If the distributor’s drives are among the most competitive on the market, the same cannot be said of its chain stores! “Their price index is systematically more expensive than the others, and it has increased again according to our latest statements”, indicates Benoît Merlaud, editor-in-chief of “Linéaires”.
Dropout is found on all types of items. According to the study published last February by this specialized magazine, the group’s brands display higher than average prices on the star references on the shelves (Le Bon Paris from Herta, Trésor cereals from Kellogg’s or even chocolate Danettes). as on fresh products (fruits and vegetables, sliced cheeses, etc.). In total, a basket of major brands charged 90.50 euros at Leclerc costs 109.70 euros at Géant, and even 118.40 euros at Casino. That’s almost 30% more expensive!
Different reasons explain these full-bodied labels. First, a vicious circle could have set in: the more the retailer sold stores and lost momentum, the more he reduced his purchasing power and his negotiating strength against suppliers such as Danone, Coca-Cola or L’Oréal, although it has cleverly forged strategic alliances with Auchan and then Intermarché to limit the phenomenon.
But that’s not all. “Even when I sell them products at the same price as their competitors, I find them 15% more expensive on their shelves than elsewhere, is surprised a manufacturer of private labels. They certainly take more margin, but I also know that they suffer from higher logistics costs, sometimes three times higher than those of Leclerc. The fault in particular of stores positioned in the city center, to deliver more regularly and under more complicated conditions.
Despite its high prices, there is one brand that seemed to resist torment: the nugget of the group, Monoprix. Innovative and rewarding, it has always been able to attract urban CSP+, with its powerful own brands (Monoprix Gourmet, Bout’chou, etc.) and its premium offer. But its results are also withering: last year, turnover fell by 3.7% (on a like-for-like basis). If the management prefers to see in this poor performance the consequence of the pandemic, many observers point to other explanations. “They have lost in creativity, believes an industrialist. They are still looking to innovate, of course, but less than before.
The deterioration of the assets, as the experts say, would also be harmful: beyond the in-depth renovation of a few stores, Paris Montparnasse or Croisé Laroche in Marcq-en-Barœul (59) for example, the park is damaged. And competition is intensifying in city centers. New channels, such as Normal or Action, arrive with their share of surprises at rock bottom prices. From Lidl to Leclerc, traditional rivals are multiplying openings, small formats and pedestrian drives to provide water packs and essential cupboard bottoms at a lower cost.
Recently, the arrival of Flink and Gorillas, specialists in delivery in fifteen minutes, further complicates the game. Despite the judicious signing of partnerships with the British Ocado on delivery, or with Gorillas to push its Monoprix brands into the on the back of bicycle couriers, the group’s stores are attacked. In Paris, “quick commerce” players have already attributed nearly half of home-delivered food sales to themselves, according to NielsenIQ data for the first quarter of 2022.
While purchasing power is emerging as the number one concern of the French, the next few months are not looking easy for Casino. But the group has a few weapons at its disposal. In different networks, he pushes, first, subscription systems: against a monthly fee of ten euros, the customer has access to 10% immediate discount on his purchases. Launched in 2019 at Géant and last year at Monoprix, the business seems to be taking hold: already 210,000 consumers have been tempted and they are spending four times more than the rest of the customers.
In addition to its usual promotional campaigns – hypermarkets offer, for example, “giant hours”, time slots during which items are sold at a steep discount – the distributor is also trying to make an impression with flashy one-off operations. eye. Like the liter of gasoline announced at 0.85 euro in its stations: the difference with the price at the pump is paid to the consumer in vouchers to be used in the neighboring store. Its e-commerce subsidiary Cdiscount, since it has relied on the market place model, has also established itself in France and Europe as a credible challenger to Amazon.
Price index: Casino always more expensive
Finally, after selling 545 Leader Price stores to Aldi while keeping the brand, the group has been testing a new discount concept for a year: LP. In a store on the outskirts of Evreux, 2,000 references are presented on pallets, 99% of which bear the Leader Price logo. Discounts are automatically applied on bulk purchases to convince families and friends to shop in bulk for less. Already several openings are in the boxes.
Nevertheless, the year will be complicated. After the 2019 event, where Jean-Charles Naouri took all his detractors by surprise by placing his holdings in the safeguard procedure, the hypothesis of a failure resurfaced. Slowly but surely, the possibility of a credit accident is making its way. In the financial department, the subject is brushed aside. Last December, the banks decided to support the group and offer it two more years. A proof of trust. Unless it’s an admission of their addiction? What is certain is that the sector is waiting for a major concentration operation and that Carrefour is on the move. However, in this context, Casino has more the profile of a prey than that of a predator.
