2028 Casino Plan: pragmatic if not ambitious

Those who were hoping for crunch and a slew of figures at the unveiling of Casino's recovery plan this morning will be disappointed. Philippe Palazzi revealed only a handful of precise objectives: 15 billion in business volume, €500 million in EBITDA and growth of 0.4% per year by 2028. And confirmed the 1, €2 billion in Capex invested over the period, half of which for Monoprix.

Clearly or implicitly, here are the 6 pieces of information you need to remember from the plan:

• An ambition largely revised downwards. In the euphoria of the first weeks, the “new Casino” of the Kretinsky/Palazzi era announced a very optimistic first business plan, in June 2023, with the creation of tire-larigot stores (2,090 units: 300 Monoprix, 590 Franprix, 1,200 proxi) and more than €930 million in EBITDA (excluding HM/SM) by 2028. Barely 18 months later, back on earth. Casino is no longer committed to the development of the park – we are talking about “controlled expansion” – and has reduced its EBITDA target almost in half (€500 million). By 2028, the business volume must increase from €13 to €15 billion including tax. The group's net turnover would only increase by 0.4% per year (integrated stores switched to franchising will mechanically penalize turnover).

• Times are tough and will stay that way. In addition to the HM/SM sold, Casino has already closed 445 stores since the start of the year, including 141 in the last quarter. A real purge, particularly in the integrated park, which is not finished. Before wanting to redevelop the group, we must already save the house! Especially since in the short term, turnover figures are at half mast (review here), including on a comparable basis. The savings and pooling plan (notably logistics) should make it possible to raise €600 million by 2028. Of which €350 million have already been committed. If the €1.2 billion Capex envelope is preserved, Philippe Palazzi instructed the teams to halve the cost per square meter of renovations ! Understand: very targeted heavy renovations and repairs for others… Necessity is law, but it's bad news. Because all Casino networks could do with a new lease of life.

• All signs are preserved. The question of pooling brands was on the table, to achieve economies of scale. It was decided, that's no. If only for purely legal reasons (imposing a change of brand de facto “liberates” the franchisee). Casino therefore retains all its “brands” each with its own vocation: Casino, Spar, Vival, Monoprix, Naturalia, Franprix.

• Cdiscount remains in the group… for now. Losing XL speed, Cdiscount is in the middle of the ford. A general site with a discount vocation, like Amazon, but now 10 times smaller than its rival in France, the former Casino gem has become a source of losses (- €50 million net in the first half). And the synergies with the rest of the group are weak or even zero. So? If the vocation and ambition remain very vague (I quote, “to be the leader in popular e-commerce”), Casino is not giving up and will devote 18% of its Capex to Cdiscount by 2028 (200 M€ or 50 million on average per year). Not a straw, then. Will the medium-term future involve some form of merger with Fnac Darty of which Daniel Kretinsky is also the largest shareholder? This is a hypothesis (personal, not official).

• Casino will pamper its franchisees. The franchise has become the cornerstone of the group, which no longer aims to develop its integrated fleet. Problem: as at Carrefour, relations with franchisees are not really in good shape (euphemism). A gradual reduction in transfer prices (announced if not quantified) and RFA paid twice a year will bring some relief to their hearts. And Philippe Palazzi wants to give Casino a real franchisor culture, drawing inspiration from how independents operate. Via a third-time model, voluntary franchisees are called upon to participate in the life of the brand (development of concepts, support for new recruits, etc.). A training center designed for franchisees will be created in St-Etienne in mid-2025.

• Take-out catering becomes a “major strategic axis”. “We are going to put our body weight into it, we want to be a major player in take-out catering,” assures Philippe Palazzi. The man has his long experience at Metro on his side. But the announcement may surprise… Because although the idea is beautiful, it is not new. For 20 years, Monoprix has already tested everything in this area. What more or better can we do? We will see more clearly once the 3 pilot Monoprix open, at 1^is quarter 2025. « Tomorrow we will be able to sell latte coffees for 4 euros, like Cojean or Prêt à Manger », insists Philippe Palazzi. I'll happily pay him one if he transforms the essay!