CARREFOUR (UP, TP EUR15.50): With the company's earnings miss in 1H17 and lower FY17 guidance it is clear that the problems within its model are now affecting financial performance. Those problems include an overreliance on the hypermarket format, the slow adoption of online channels, consistently high capex and a sprawling set of operations. The new CEO has only been in the role for 6 weeks; this was not a 'kitchen sink' release. Reengineering business takes time; Tesco is only halfway through a six-year process to recapture historical margin levels. Carrefour enjoys various advantages over Tesco but we see the fundamental problems as being similar.
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