Jefferies favours Colruyt over Metro as pressure on European consumers mounts

Metro AG

07/11/2022 08:22

** Jefferies sees discount grocer Colruyt  COLR.BR  as more
resilient than German wholesaler Metro  B4B.DE  to mounting
pressure on European consumers
    ** As such, it upgrades Colruyt to "buy" from "hold" and
cuts Metro to "underperform" from "hold" 
    ** Europeans spending on leisure in the summer supported
Metro's business and slowed down the gains of discount retailers
such as Colruyt, Jefferies says
    ** However, it expects this trend to reverse in 2023, with
the "attractions of a discount grocers offering relative
resilience" 
    ** The broker adds the sale of some of Colruyt's energy
assets should show the full value of its energy business
    ** When it comes to Metro, Jefferies says consensus doesn't
take into account the risk from restaurant exposure and from
energy and wage costs
    ** Cost-of-living pressures are "forcing food spend back
into the home, and away from the HoReCa (hospitality and food
services) channel which accounts for c.50% of B4B's sales,"
Jefferies says
    ** Jefferies also notes it is increasingly difficult to
ascribe any value to Metro's Russian operations, which it
estimates accounted for at least half of Metro's FCF in 2020/21
 (Reporting by Valentine Baldassari)
 ((Valentine.baldassari@tr.com))