December 1, 2017 / 8:02 AM / 2 years ago

Carrefour and Fnac Darty discussing purchasing alliance - report

PARIS (Reuters) - French retailers Carrefour and Fnac Darty are discussing an alliance to negotiate better terms when purchasing from electronics suppliers, French finance website BFM Business reported on Friday.

The Carrefour logo is pictured in a supermarket in Sao Paulo, Brazil November 9, 2017. REUTERS/Nacho Doce

Carrefour declined to comment, but a source close to the company said its non-food team was talking to “several players and not just Fnac Darty.” Fnac Darty declined to comment.

Alexandre Bompard, the former boss of Fnac Darty, France’s largest electronics retailer, took over as CEO at Carrefour, the world’s largest retailer after Walmart, in July. He will unveil his strategy for Carrefour, best known for its hypermarkets, on Jan. 23, following a profit warning in August.

Bompard is expected to back a far-reaching restructuring that some analysts estimate could involve a billion euros (£0.88 billion) of cost cutting.

Investors want Bompard to boost the performance of the group’s France-based hypermarkets, a goal that has eluded several predecessors amid competition online and price discounting from rivals such as unlisted Leclerc. They also want him to catch up in the digitisation of retail.

Fnac Darty, formed by the Bompard-led merger of music and book retailer Fnac and consumer electronics group Darty, will present its own strategic plan on Dec 5.

“According to BFM Business’ information, Carrefour and Fnac Darty have been discussing for several months a major alliance to pool together purchases,” the website reported.

“It would involve jointly buying consumer electronics and household equipment.”

The alliance would be limited to France.

At 0937 GMT, Fnac Darty shares were up 1.24 percent. Carrefour’s were up 0.06 percent.

“We have calculated that such buying synergies could have an accretive impact on Fnac’s EPS (earnings per share) of as much as 14 percent. We will wait for Fnac’s strategic plan to adjust our forecasts,” said Kepler Cheuvreux in a note.

Fnac Darty is 24 percent owned since July by German peer Ceconomy.

Last year, Carrefour’s domestic rival Casino and furniture chain Conforama, owned by South African group Steinhoff, struck an agreement covering household appliances to use a combined 1.3 billion euros of purchasing power to lower costs and improve efficiency.

Reporting by Pascale Denis and Dominique Vidalon; Editing by Leigh Thomas and Mark Potter

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