PARIS (Reuters) - French supermarket retailer Casino (CASP.PA) is targeting a further 2 billion euros ($2.2 billion) of asset sales as it steps up plans to cut debt and improve its financial performance.
Casino has been struggling against a tough business climate in France, where the impact of a price war among supermarket operators has dented retailers’ profit margins.
“The board of directors has validated the arbitration of assets whose disposal would be a source of value creation,” Casino said in a statement on Tuesday.
“As a result, new asset disposals for a target amount of 2 billion euros have been identified, with this second phase of the disposal plan to be completed by the end of Q1, 2021.”
Shares in Casino rose by 4.7% to a four-month high in early trading, making them the leading performer on Paris’ SBF-120 .SBF120 equity index, as analysts welcomed the new asset sales.
“The move should allow Casino to free up cash and to focus more on lucrative business lines such as E-Commerce and stores located in city centers as opposed to out-of-town hypermarkets,” said Meriem Mokdad, a fund manager at Roche Brune Asset Management in Paris.
The new asset sales are in addition to the company’s existing plan to sell off 2.5 billion euros of assets by the first quarter of 2020. Casino has already signed agreements for sales worth 2.1 billion euros.
The sales so far consist mainly of the disposal of non-core supermarkets or property assets to private equity investors. Casino has also been looking to simplify its Latin American operations.
In May, Casino’s parent company Rallye (GENC.PA) was placed under protection from creditors.
Casino’s net debts stood at 4.7 billion euros at the end of June.
Reporting by Sudip Kar-Gupta; editing by Mike Harrison