(Oct 21): Carrefour SA warned that the social unrest roiling France will drag on its earnings this year, the first sign of the economic impact from riots in Paris and other cities last weekend.

The grocer cut its profit outlook and other annual financial targets, sending its shares plunging by as much as 15% in Paris trading on Wednesday, the biggest intraday decline since 2017. 

“There is a high degree of uncertainty regarding consumer spending trends and the conditions under which our stores will be able to open,” Chief executive officer Alexandre Bompard said late on Tuesday, describing the situation in France as unprecedented. 

More evidence of the effect on businesses may emerge when retailer Fnac Darty and luxury groups Hermes International SCA and Kering SA publish sales figures this week.

Cost-of-living protests that drew more than half a million people across France turned violent over the weekend as fast-moving groups targeted hundreds of shops, smashing windows and looting merchandise. 

While the turmoil has abated after curfews were imposed, protesters have called for another day of unrest on Saturday.

Carrefour is the first retailer to disclose the financial impact of the riots, and likely one of the most affected because of its city-centre and suburban shops in Paris and other towns. 

“Weaker sales from an extended period of reduced store hours would push the profit shortfall into high single digits,” wrote Bloomberg Intelligence analyst Charles Allen.

About 50 Carrefour stores were hit on the first day of rioting, with many looted and badly damaged, Bompard told analysts. That’s leading to lower footfall, reduced opening hours and increased costs for security and logistics, he said. Carrefour sees a maximum possible impact on profitability of around €200 million (RM916.18 million). 

The ultimate hit to French growth will depend on how long disruption lasts, Charlotte de Montpellier, senior economist for France and Switzerland at ING, said in a note. “If unrest remains brief and concentrated, the macroeconomic impact could be relatively limited, but repeated protests, closures and transport disruption would make lost activity harder to recover.”

Roving bands broke into and looted businesses ranging from high-end boutiques to sporting goods stores and supermarkets. 

“As we enter the critical end-of-year period for the retail sector, this situation is having a significant impact on consumer spending — which is already under pressure from rising energy costs,” Bompard said.

Uploaded by Felyx Teoh