1. 1 A Service Strategic Preview: Q2 April – June 2013 15 July 2013 GILDAS AITAMER Retail Analyst STEPHEN SPRINGHAM Senior Retail Analyst

2. 2 Analyst Comment: Strategic Preview: Carrefour Q2 “We remain confident that Carrefour’s efforts to rationalise processes and appoint people expert in their fields in key positions will eventually enable the retailer to get back on track. In its home market, consistency is the keyword and the store refurbishment programme, alongside a sustained push on prices, are likely to pay off. That said, the competition is following a very similar path and the early fruits of Carrefour’s labours may be swept away by the current harsh market environment. Internationally, Carrefour still has a lot on its plate, with Spain and Italy especially continuing to weigh heavily on performance in Western Europe, while in CEE, Poland and Romania are at an increasingly difficult juncture. In Argentina, the retailer is under pressure to contain its prices from a government trying to fight inflation. Both BRIC operations are likely to see slowdowns in growth, Brazil impacted by a negative exchange rate and China by a decline in like- for-likes.” “We remain confident that Carrefour’s efforts to rationalise processes and appoint people expert in their fields in key positions will eventually enable the retailer to get back on track. In its home market, consistency is the keyword and the store refurbishment programme, alongside a sustained push on prices, are likely to pay off. That said, the competition is following a very similar path and the early fruits of Carrefour’s labours may be swept away by the current harsh market environment. Internationally, Carrefour still has a lot on its plate, with Spain and Italy especially continuing to weigh heavily on performance in Western Europe, while in CEE, Poland and Romania are at an increasingly difficult juncture. In Argentina, the retailer is under pressure to contain its prices from a government trying to fight inflation. Both BRIC operations are likely to see slowdowns in growth, Brazil impacted by a negative exchange rate and China by a decline in like- for-likes.” GILDAS AITAMER Retail Analyst “Carrefour is now expected to lose its crown to Leclerc as the market leader in France as early as 2014. This loss of kudos should not overshadow the improvements that are being made at the group’s core. These are starting to manifest themselves in trading figures, albeit slowly. Self- help measures domestically (and an admittedly soft comparable) should result in lower like-for-like declines at the core French hypermarket division in Q2 2013. Indeed, we would expect food like-for-likes to be in positive territory, offset only by ongoing declines in non-food, no doubt exacerbated by the weather. But better to be a relatively healthy number two in the market than an ailing number one. The breadth of Carrefour’s international operations will always make for a mixed picture. Italy’s Q2 figures are likely to make for the grimmest reading, but China perhaps warrants the greatest attention. Performance is likely to be below par and the group is thought to be weighing up its options – a withdrawal is highly unlikely, but guidance on strategic direction would be very welcome.” “Carrefour is now expected to lose its crown to Leclerc as the market leader in France as early as 2014. This loss of kudos should not overshadow the improvements that are being made at the group’s core. These are starting to manifest themselves in trading figures, albeit slowly. Self- help measures domestically (and an admittedly soft comparable) should result in lower like-for-like declines at the core French hypermarket division in Q2 2013. Indeed, we would expect food like-for-likes to be in positive territory, offset only by ongoing declines in non-food, no doubt exacerbated by the weather. But better to be a relatively healthy number two in the market than an ailing number one. The breadth of Carrefour’s international operations will always make for a mixed picture. Italy’s Q2 figures are likely to make for the grimmest reading, but China perhaps warrants the greatest attention. Performance is likely to be below par and the group is thought to be weighing up its options – a withdrawal is highly unlikely, but guidance on strategic direction would be very welcome.” STEPHEN SPRINGHAM Senior Retail Analyst

3. 1.Expectations for the Quarter 2.France: Q2 Strategic Changes 3.Global: Q2 Strategic Changes 4.Outlook 5.What’s new at Planet Retail Strategic Preview: Carrefour Q2

4. 4 We expect Carrefour to maintain momentum in Q2, with like-for-likes boosted (and somewhat flattered) by the very soft comparable a year ago. Actual Like-for-Like Sales Projected Like-for-Like Sales

5. 5  We expect a mixed quarter for Carrefour, with some evidence of results from efforts to improve the operations, especially in light of negative like-for-like comparisons a year ago.  Even so, Carrefour remains under pressure, particularly from a price-focused Leclerc, boosted by further enhancements to its famous price-checking website. Casino, too, has continued to drastically cut prices in a bid to increase customer traffic. Carrefour is likely to be have been impacted by the poor weather conditions this quarter, particularly in sales of non-food in hypermarkets and supermarkets.  Spain and Italy in particular continue to weigh down the European business, with no other market able to compensate. While Belgium is likely to continue to post positive like-for-likes, the situation in Poland is likely to have tightened compared to last year, while in Romania the recruitment of minor franchisees and the introduction of an e-commerce operation are unlikely to have significantly lifted country performance.  As for China, Carrefour is unlikely to post positive like-for-likes this quarter in light of the wider economic slowdown. LATAM has traditionally bolstered the retailer’s headline figures, but even here performance may be hampered by the current situation in Brazil and the government’s extended price freeze in Argentina.  That said, we remain confident that Carrefour’s initiatives over the previous quarters will eventually pay off, and we should soon enter a phase of relative stability. Georges Plassat’s recruitment policy of attracting new key managers, expert in their respective fields, will also eventually ease many of the retailer’s structural difficulties. A mixed quarter for Carrefour in prospect, with self-help measures muted somewhat by external factors.