Goldman Sachs cuts Carrefour earnings forecasts and target price, maintains Neutral rating

Overview

This report updates Goldman Sachs' earnings forecasts for Carrefour, mainly due to recently moderating momentum in the French food retail market, the impact of store closures, and a higher 2Q comparison base. Goldman Sachs also adjusted the timing of Cora/Match margin recognition, lowered its 1H26E and FY26E EBIT forecasts, cut the 12-month target price to €17, and maintained a Neutral rating.

Core views

Goldman Sachs believes Carrefour's short-term earnings elasticity is constrained by the slowdown in the French grocery market and competitive pressure. Although FY26E EPS is still expected to grow 4.4% YoY, the forecast has been cut by 4.9%, indicating that the pace of earnings improvement is weaker than previously assumed; after the target price cut, upside versus the current price is only in the single digits, supporting a Neutral rather than more positive view.

Analysis framework

The report revises LFL, EBIT margin, EBIT, and EPS based on trends in the French grocery market, store closures, the 2Q YoY base, the timing of Cora/Match margins, and group earnings forecasts, and derives the 12-month target price using DCF valuation.

Methodology notes

• Valuation methodsDCF

  12-month target price

  Goldman Sachs uses DCF to derive the target price; after the earnings forecast cut, the 12-month target price was lowered from €18 to €17.

• Factor profileGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  This framework compares a stock's growth, financial returns, and valuation multiples with the market and industry peers to provide investment context.

• M&A scenarioM&A Rank

  Acquisition probability score

  Goldman Sachs uses a 1-to-3 scale to assess the probability that a company becomes an acquisition target; the disclosure section explains this framework, but this report does not provide a specific M&A score for Carrefour.

• Data platformQuantum

  Database for financial history, forecasts, and ratios

  Quantum is Goldman Sachs' proprietary database for in-depth single-company analysis and cross-company comparison.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Carrefour (CARR.PA)

  Covered company and core equity asset

  Strengths

  FY26E EPS is still expected to grow 4.4% YoY, and the target price implies about 5.6% upside versus the current price.

  Weaknesses

  The slowdown in the French grocery market, store closures, and a higher comparison base depress 2Q LFL and margin assumptions.

  Comparison

  The rating is determined relative to European retail peers in its coverage universe, including Ahold Delhaize, Tesco, Marks & Spencer, and Zabka Group.

  Risks

  Intensifying competition in the French market, price wars driven by a rapid decline in food inflation, and depreciation of the Brazilian real.

• Carrefour Brasil

  Important earnings and FX exposure

  Strengths

  A significant appreciation of the Brazilian real would represent upside risk.

  Weaknesses

  Carrefour Brasil accounts for about 40% of Carrefour's consolidated EBIT, making the group sensitive to the Brazilian exchange rate.

  Comparison

  Compared with the French operations, the Brazilian business is more affected by FX translation.

  Risks

  Depreciation of the Brazilian real would create a major translation headwind.

Key data

• 2Q group LFL+1.5% (vs. previous +1.8%)Below the +2.0% trend in 1Q.
• 1H26E EBIT margin1.9% (vs. previous 2.1%)Affected by the slowdown in the French market and the adjustment to the timing of Cora/Match margins.
• 1H26E group EBIT€780mn (vs. previous €864mn)Earnings forecast cut.
• FY26E group EBIT€2.36bn (vs. previous €2.45bn)Full-year earnings forecast cut.
• FY26E EPS€1.66Forecast cut by 4.9%, but still expected to grow 4.4% YoY.
• 12-month target price€17 (vs. previous €18)DCF-derived, implying about 9.5x FY27E P/E.
• Current price€16.10Carrefour price shown on the disclosure page.

Impact & implications

The cut in earnings forecasts weakens support for Carrefour's short-term valuation, indicating that competition and demand trends in the French food retail market remain the key constraints. The target price still implies slight upside relative to the current price, but Goldman Sachs maintains a Neutral rating, implying that it does not view the risk-reward as particularly compelling and that investors need to wait for greater clarity on variables such as French market trends, margins, and the Brazilian exchange rate.

Risks

• The French grocery market remains one of the most competitive in Europe, with historically low profitability, and may require reinvesting more cost savings into price and market-share competition.
• If inflation in European food input costs falls rapidly, irrational competition may emerge and compress margins if price leaders cut prices early to gain share.
• Depreciation of the Brazilian real R$ would create a major translation headwind because Carrefour Brasil accounts for about 40% of the group's consolidated EBIT.
• If hypermarket traffic faces a prolonged negative impact, it could weigh on the recovery of the French business.

What to watch

• Whether sales momentum and competitive intensity in the French grocery market continue to slow or deteriorate.
• Whether 2Q group LFL can meet the revised expectation of +1.5%.
• The realization timing of Cora/Match margins and its impact on 1H26E EBIT margin.
• Whether major retailers launch more aggressive price competition after European food input cost inflation falls.
• The trend of the Brazilian real and its impact on Carrefour Brasil earnings translation.
• Whether volumes recover meaningfully after food inflation eases, and whether at-home food consumption sees a structural increase.