General presentation of the Casino Company:
The Casino Group, also called ‘Casino Guichard-Perrachon’, is one of the leaders in food distribution in France. But its activity is quite varied, mainly in international distribution and in France to a lesser degree, plus the company is also involved in restaurant services and e- commerce.
The Casino Group achieves over 57.4% of its turnover in France but is also present in Latin America and Asia.
Know the competition to Casino shares:
The Casino Group is currently one of the leaders in distribution and retail in France and Europe. However, on an international level it faces very strong competition from major players in this sector. With the following classification we offer you the opportunity to learn more about the major distributors and retailers worldwide with the Casino Group occupying 12th position.
- Walmart: The worldwide leader in this sector for the last few years.
- Costco: Currently second in this classification.
- Carrefour: A French group that holds third position here.
- Seven & i
- Coles Group
Strategic alliances implemented by the Casino Group:
- Cencosud: In 2007, the Casino Group had already concluded a partnership with Cencosud for the creation of a joint venture for the development of DIY activities in Colombia and to define a possible extension to this throughout Latin America. This joint venture is owned 70% by Cencosud and 30% by Casino.
- Mutant Distribution: In 2013 the Casino Group signed a partnership agreement with the Mutant Distribution Group for the purchase by Leader Price of 47 supermarkets in France through a brand licensing and supply contract.
- Bolloré: In 2016 the Casino Group announced the implementation of a strategic partnership with the Bolloré Group for the development of e-commerce in Africa. This agreement was for the creation of a joint venture and a rapid launch of an initial online sales website.
- LyfPay: In 2018 Casino strengthened its partnership with the LyfPay Group, a company that offers mobile and multichannel payment solutions, and included a 5% participation in the capital of Lyf structures.
- Amazon: In 2019 the group strengthened its partnership with the Amazon Group that came into being in 2018 which thereby enabled the sale of Monoprix products on the American giant’s online platform.
The strong points and advantages of Casino shares as a stock market asset:
We can initially note the undeniable advantage represented by the group’s position in the distribution sector on an international level. In fact, the Casino Group is currently one of the largest distributors worldwide. It is also one of the best in this activity sector in France through its various brands such as Casino, Franprix, Leader Price and Monoprix as well as in Brazil with the GPA brand which is currently the most lucrative of the group. We also note that the Casino Group holds the leading position in this activity sector in Colombia. The group is therefore highly present on the international level which is clearly a major advantage that should be taken into account when completing your analyses.
We also greatly appreciate the strategy implemented by the group, notably where related to the French market. The company decided to refocus its commercial activities on local trade which is currently experiencing strong growth particularly in major towns. For this the group has taken total control of the Monoprix brand supermarkets as well as those of Monop’ and Daily Monop’. Casino has also implemented the same type of strategy on some of the foreign markets following its success in France.
The Casino Group has also recently commenced a total reorganisation of its activities which are divided among different sectors. Although the merger of its activities in France still generates more than 42% of its sales the e-commerce activities and its various activities in Latin America, separated into two major parts Latam Retail and Latam Electronics with Viavarejo is also a judicial decision that decreases the risk exposure of the group.
Finally, we are pleased to observe that the financial situation of the group has clearly improved over recent years. Casino has succeeded in reducing the level of its debt, notably by withdrawing from the Asian market and opening the capital of real estate subsidiaries in Colombia. The group also reacted effectively by simplifying its structures on the Brazilian market and in the e-commerce sector with Cnova. The Casino Group has also improved its auto-financing capacity through the purchase of refundable bonds with Monoprix shares. In this manner it has succeeded in reducing its debt by half in less than a year which has reassured numerous investors.
The weak points and disadvantages of Casino shares as stock market assets:
The first weak point we note relating to Casino and its activities concerns the profitability of the French market. The group has experienced some difficulties since 2014 with a decrease in the profitability of certain brands such as Leader price which is still currently in deficit as well as the Géant brand. These two brands have in fact been required to adapt to a price adjustment that has significantly impacted the group and its financial results.
The net global profitability of the Casino Group is also suffering from the consequences of the strong presence of minority interests in subsidiaries abroad. It is therefore strongly recommended to monitor changes in the financial results and the consequences of this phenomenon in the coming years.
Still relating to the Casino Group’s activities abroad, we also bemoan the clear decrease in profits and margins recorded on the Brazilian market. This market has actually suffered from a period of significant economic recession and devaluation that represents a significant setback to the development of Casino and its activities in this country.
Finally, although the group has succeeded in rapidly and significantly improving its financial situation investors continue to show signs of anxiety regarding the ability of this company to reduce its debt over the long term. The company therefore needs to find long term financially viable and reliable solutions to reassure the market and encourage an increase in the share price.
As you may have noted the situation of the Casino Group remains uncertain regarding its future and taking a position over the long term should therefore be carefully considered beforehand.