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Sept. 1, 2021, 10:32 a.m. EDT

Carrefour shares buck a rally for Europe stocks as one of the world’s richest men sells his stake

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By Barbara Kollmeyer

European stocks mostly rose on the first day of September, driven by gains for apparel makers and beverage groups such as Pernod Ricard, while shares of Carrefour led the decliners after losing one of its biggest investors.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP +0.26% rose 0.3% to 472.56, after a nearly 2% gain in August. The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.11% slipped 0.2%, the French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.02% climbed 1% and the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.05% rose 0.4%. Gains were pared after a slightly weaker-than-expected U.S. private-sector payrolls report.

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.0828% and pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0403% were up 0.2% each against the U.S. dollar.

On the data front, the final reading for the eurozone’s manufacturing PMI for August was 61.4, a six-month low, data from IHS Markit showed Wednesday. That was slightly below the preliminary estimate of 61.5 and below July’s level of 62.8. A reading above 50 indicates an expansion an activity, while below this threshold signals a contraction.

“The overriding issue was again a lack of components, with suppliers either unable to produce enough parts or are facing a lack of shipping capacity to meet logistics demand,” said Chris Williamson, chief business economist at IHS Markit.

Shares of Carrefour /zigman2/quotes/208564127/delayed FR:CA +0.98% slumped more than 4%, making the French multinational retailer one of the day’s worst performers after the company said late Tuesday that the Agache Group had decided to sell the remainder of its stake. Agache is the holding company of the world’s third-richest man Bernard Arnault, who is the founder and chief executive officer of luxury-goods company LVMH Moet Hennessey Louis Vuitton /zigman2/quotes/201350549/delayed FR:MC -0.07% .

The move sends a negative signal for Carrefour, given that Arnault has clearly capitulated and is selling his shares at a deep discount, said Clément Genelot, analyst at Bryan Garnier, who noted that the billionaire first bought shares at €40 in March 2007, from a current sale price of around €16.

However, the analyst is keeping a buy rating on Carrefour, which “remains an appealing story at this valuation level with a commercial recovery finally materializing, a healthy balance sheet and good FCF (free cash flow)paving the way for recurring M&A and/or recurring shareholder returns,” Genelot said in a note.

The analyst sees the powerful Moulin family shareholder as likely able to scare off activists, while a hostile bid looks unlikely given there are few possible buyers outside of convenience store group Couche-Tard . Shares of LVMH were among the top performers, up 3%, which helped boost the French CAC 40.

Another big loser, WH Smith /zigman2/quotes/201823422/delayed UK:SMWH +1.95% , said it expects the outcome for the year ended Aug. 31 to be slightly above previous guidance, but profitability at the lower end of market expectations.

On the upside, shares of Pernod Ricard /zigman2/quotes/204974112/delayed FR:RI -1.84% climbed more than 3% after the French drinks group reported higher sales and earnings for fiscal 2021, driven by the Americas. It also set out plans to resume dividends and buybacks, and said it would will take a minority stake in a U.S. premium-focused peer Sovereign Brands.

While Pernod offered no explicit guidelines for 2022 organic earnings before interest and taxation, the first quarter looked “very dynamic,” and full-year 2021 sales momentum is likely to continue into next year, said Edward Mundy, analyst at Jefferies, in a note to clients. Rival drinks group Diageo /zigman2/quotes/205611832/delayed UK:DGE -1.44% /zigman2/quotes/208129584/composite DEO -1.07% rose 1.8%.

Prosus /zigman2/quotes/214038022/delayed NL:PRX +1.21% shares climbed 4%, continuing to gain a day after the technology investor bought India’s BillDesk for $4.7 billion. Another strong day for shares of Chinese multinational technology conglomerate holding group Tencent /zigman2/quotes/204605823/delayed HK:700 -5.40% , of which Prosus has a 29% stake, lifted its stock.

 

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