Carrefour cuts operating margin improvement target to 0–15 basis points despite sales growth

Key Facts

Carrefour lowered its financial outlook for 2026 as it reported third-quarter sales, linking the revision to deteriorating social and security conditions in France and their impact on consumption and store operations. The company said in its investor presentation that it now targets an operating margin improvement of between 0 and 15 basis points, compared with a previous target of 25 basis points. The new range includes the possibility of a stable margin, after the previous guidance targeted a larger improvement during the year. The group thus lowered the upper end of its expected improvement in operating profitability while its quarterly sales continued to grow. The target revisions also covered adjusted earnings per share, net free cash flow and capital expenditure, alongside the revised operating margin outlook.

According to its sales statement, the group recorded like-for-like sales growth of 2.3% in the third quarter, exceeding the pace achieved in the first half of the year. Carrefour had reported an increase of 2.1% on the same basis in its first-half results, putting the latest quarterly performance ahead of the previous period. Quarterly sales including tax totalled 22,694 million euros, before hyperinflation adjustments. That sales figure coincided with a downward revision to the annual outlook, despite accelerating like-for-like sales growth. Business activity continued to grow during the period in which the group announced lower financial targets for the rest of the year.

Detailing its earnings outlook, Carrefour said in its statement that it expects "stable to slightly higher adjusted earnings per share" for the year, compared with the growth trajectory it had previously targeted. Its first-half results had included guidance for high-single-digit growth in adjusted earnings per share, before that estimate was revised with the quarterly sales announcement. The new guidance lowers the targeted pace of adjusted earnings per share growth, including the possibility of a stable outcome among the results the company expects. The group expects net free cash flow to decline slightly during the year, according to its statement. That estimate adds an expected decline in cash flow to the lower profitability targets as part of the broader revision to annual financial objectives.

Carrefour identified higher security and logistics costs among the operational effects of the unrest in France, according to the investor presentation accompanying its sales results. The company cited an "increase in operating costs related to security and logistics" in explaining the pressures associated with conditions in France. The repercussions described by the group extend to store operations and consumption, alongside the additional burden of securing operations and transporting goods. On spending targets, Carrefour cut planned capital expenditure to 1.6 billion euros from a previous target of 1.7 billion euros. This sets a lower level of planned capital expenditure for the year, alongside the new earnings and cash flow forecasts announced by the group.

By market, Carrefour's sales in France rose 1.2% on a like-for-like basis in the third quarter, according to the company's statement on quarterly performance. Spain recorded growth of 2.1% on the same basis and over the same period, outpacing the French market. In Brazil, like-for-like sales rose 1.4%, a faster pace than France but slower than Spain among the markets cited. The group's e-commerce business grew 18% in the third quarter, alongside the increases the company reported in sales across its geographic markets. Its online business thus continued to expand alongside like-for-like sales growth in France, Spain and Brazil, despite differing rates of growth across markets.

As background to its financial targets, Carrefour's annual cost savings goal stands at one billion euros for 2026, according to the sales statement outlining the group's performance and outlook. That target places cost reductions within the company's financial programme for the year in which it revised its margin, earnings per share and cash flow forecasts. The targeted savings come as French operations face additional operating costs related to security and logistics, according to the company's explanation of the current pressures. The next announced milestone concerns the hypermarket business in France, the market whose conditions the group linked to its revised annual targets. Carrefour said it would present its strategy for that business on 17 November 2026, the date specified in its sales statement.