Q3 15 sales due Thursday 15 October before the open.
Better in France but very difficult in emerging markets
Watch out for We expect better trends in France, driven, in particular, by lower deflation
linked to price cuts. We expect LFL sales growth ex calendar/fuel of 3.2% for Geant
hypermarkets (+1.7% Q2) and 1.0% for Leader Price (-0.9% Q2, -7.1% Q1). Trends at the
other French banners should prove relatively resilient: -1.0% Casino supermarkets (-2.3%
Q2), 0.5% Monoprix (0.7% Q2), -0.2% Franprix (-3.0% Q2). Outside France: trends are
likely to be tough, consistent with Q2 trends; we see 1.5% LFL growth in Latam Retail
(+2.4% Q2), -24.0% for Latam Electronics (-23.6% Q2) and -3.0% for Asia (-2.9% Q2).
Potential market reaction Despite less short-term risk of potential credit rating downgrades
and growing confidence on dividends, Casino still has a long way to go if it is to reassure on
fundamentals and improve EPS dynamics. Hence, we reiterate our Hold rating. Our TP is the
average of our peer comparison (€49, 10% discount to European peers), NAV (€45) and
DCF estimates (€62: WACC 8.9%, perp. growth 2.5%, norm. EBIT margin 4.7%).
Risk to TP: upside – better-than-expected purchasing synergies (SGe €80m for 2015); a strong
margin recovery in France; downside – further weakness in the Brazilian real; strong margin
erosion for GPA/Via Varejo.