Carrefour hits 2020 lows on possible fine for franchise operations
Updates share move, adds CFRA comment, rating change
** Shares in Carrefour CARR.PA fall around 7% after a press report that France's finance ministry recommended a "record" fine for management of its franchise network
** France's finance ministry has asked a court to fine Carrefour
** CFRA Research cuts Carrefour to "hold" from "buy", saying the issue could take time to unwind and potentially disrupt the group's strategic initiatives
** But Bernstein says investors' reaction is exaggerated asit assumes 20% of French profit is wiped out permanently
** "We think this court case pertains to a very small number of franchisees ... and only 200 members of the more than 2000 franchisees," Bernstein says
** Bernstein adds it is also not clear if the changes to the contracts would erode Carrefour's profitability to the tune of 200 million euros
** J.P.Morgan sees relatively limited impact of the fine itself and says any potential renegotiation within current franchise agreements, which could mean bigger financial implications, is too difficult to quantify at this stage
** The stock, one of the worst performers on France's blue-chip CAC 40 .FCHI index, hits its lowest price since late December 2020
($1 = 0.9320 euros)
Reporting by Dagmarah Mackos and Diana Mandia
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