European food retailers' numbers to reflect purchasing power decrease - HSBC

Metro AG

21/07/2022 10:10

** Higher inflation is positive for food retailers as long
as it doesn't impact purchasing power, which is "no longer the
case", says HSBC
    ** The broker says that private labels, promotions and
personalised loyalty programmes are the main tools against
decreasing purchasing power, but they imply sacrificing margins
in the short term
    ** European food retailers' results will reflect higher
inflation across countries with various degrees of impact on
profitability, HSBC says
    ** The brokerage upgrades Ahold Delhaize  AD.AS  to "buy"
from "hold", saying the retailer is "the benchmark in modern
food retailing, especially in terms of execution and capital
allocation, but there is still room for improvement"
    ** It expects Ahold Delhaize's perfromance to be driven by
the U.S., while Europe remains penalised by Belgium
    ** HSBC maintains "buy" on Carrefour  CARR.PA , expecting
resilient performance in H1 driven by Latin America and France,
seeing the French retailer in much better shape to deal with
high inflation 
    ** HSBC keeps "hold" on Jeronimo Martins  JMT.LS  and Metro
 B4B.DE , expecting resilient H1 but continued muted outlook for
the former; and strong results driven by inflation passed onto
clients for the latter, highlighting however challengers from
growing risk of recession 

 (Reporting by Elitsa Gadeva)
 ((elitsa.gadeva@thomsonreuters.com))