(Adds details on brokerage report, Casino’s response)
PARIS, Aug 8 (Reuters) - Shares in France’s Casino fell as much as 10 percent after brokerage Bernstein reignited concerns over the retailer’s cash-flow in a report, disputed by Casino, stating franchise problems could wipe 152 million euros from its profit.
Casino shares traded down around 8 percent late on Wednesday, having earlier approached 22-year-lows.
Bernstein cut its rating on Casino to “underperform” from “market perform”, citing concerns over how the company’s franchise model in France might impact its profits and cash-flow.
Bernstein analysts estimated changes to the franchise model ought to result in a 152 million euro ($176.23 million) reduction of the company’s earnings before interest, taxes and amortisation.
The French retailer sent a press release on Wednesday afternoon disputing Bernstein’s estimates.
“The results of the franchise partnerships are fully disclosed and appropriately accounted for,” Casino said.
Casino said its franchise contracts do not force it to buy back underperforming franchise stores as Bernstein implied.
In a very unlikely scenario where all the stores operated by franchises would have to be simultaneously closed, “the one-off cost for the group would be limited to around 50 million euros,” it said.
Casino, which had its credit rating cut to junk by Standard & Poor’s in March 2016, is under pressure to show it can revive profits in France, where it competes with bigger rivals such as Carrefour.
Casino, whose parent group is French company Rallye , reiterated on Wednesday it was planning to reduce its net financial debt by at least 1 billion euros this year even when taking into account potential costs related to franchise transactions.
$1 = 0.8625 euros Reporting by Inti Landauro and Sudip Kar-Gupta, Marc Angrand and Zuzanna Szymanska; Editing by Ingrid Melander and Alexandra Hudson