Bernstein Research: Carrefour Law Suit Could Impact Margins, Price Negotiations
Analysts Bernstein Research have suggested that a law suit against Carrefour for reported abusive commercial practices against suppliers could have an impact on the retailer's margins next year.
Last week, the French government announced legal proceedings against the retailer, which follow on from a raid of Carrefour's offices last February.
Bernstein estimates that Carrefour could be liable to repay about €15 million to suppliers if Carrefour loses the case, however predicts that longer-term impacts could be more impactful.
'The longer term impact would be that the case impacts the current price negotiations for 2017 and therefore weakens Carrefour's future margins (rather than just the legal fine),' Bernstein said in a note.
'However, the government makes clear that they are looking at other retailers as well and the article refers to Casino, Intermarché, Auchan and Système U. If all retailers are equally impacted it will make it easier for the cost inflation to be passed on to consumers and a material impact on Carrefour's margin will probably be avoided'.
© 2016 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. To subscribe to ESM: The European Supermarket Magazine, click here.