In October 2025, the former CEO of the French grocery giant, Casino Guichard Perrachon SA, will stand trial in Paris for market manipulation.
Jean-Charles Naouri is accused of paying a publisher to artificially defend Casino's share price between 2018 and 2019. Casino is also being prosecuted for similar offenses. Three former Casino executives will be tried for price manipulation, including the former communications director.
Nicolas Miguet, the press publisher involved in the case, faces charges of money laundering and insider trading. The investigation by the National Financial Prosecutor's Office alleges orchestrated manipulation to defend Casino's share price.
Casino, in financial difficulty, had seen its share price fall from more than 5,000 euros at the end of 2017 to 4.385 euros by the end of 2019. Naouri disputes these accusations, claiming that the investigation ignored crucial elements of his defense.
Regardless of the outcome of this case, the Transparently Risk Engine consistently warned that Casino was a disaster waiting to happen. We regularly use this tool, which is an AI-powered system that detects accounting manipulation for our company research. The TRE scores the quality of a company’s accounting on a 0-100% scale, in the process assigning them a rating of A+ to F.
In 2018, the system gave Casino a risk grade of “E.” This slipped to an “F” in 2019, where it has remained. An “F” grade system indicates substantial issues with accounting quality and transparency. The bottom 10-15% of companies globally possess this risk grade, which frequently suggests, as occurred with Casino, considerable risk of a share price collapse.
History of Casino Group
Casino, the French grocery giant, opened its first store in Saint-Étienne in 1898. The company grew rapidly, opening its 100th branch by 1904. From the outset, Casino demonstrated social responsibility, offering generous pension and health insurance benefits for employees. It even opened a social club for employees with a football team, which lost the European Cup to Bayern Munich in 1976.
In 1910, the company listed on the Paris exchange. It opened its first self-service store in 1948 and in 1959 became the first retailer to display a sell-by date on its products. In the 1960s and 1970s, Casino branched into supermarkets and hypermarkets. By the 1980s, Casino was beginning to expand overseas and had a leading presence in the grocery and hypermarket segments.
In 1991, the investment banking group Euris, led by Jean-Charles Naouri, saw opportunities in French food retailing. It acquired a 50% interest in Soficam, the family holding company that controlled the troubled French retailer Rallye. Naouri then gained control of Rallye after arranging a FFr 4.5 billion restructuring of Rallye's debt.
In 1992, Naouri orchestrated a deal to sell Rallye's hypermarkets and supermarkets to Casino in exchange for a 30 percent share in Casino, making him the largest shareholder. He used extensive leverage to eventually consolidate control of Casino in 1998 through a complex network of holding companies.
With Naouri in the driver’s seat, Casino began to make aggressive acquisitions with the purchase of Monoprix-Prisunic (50%), Franprix, Leader Price and Cdiscount, all in 2000. These acquisitions left the company with considerable debt and consolidation challenges. Casino’s share price never exceeded its 1999 high.
Faced with these challenges, Naouri appointed himself CEO and Chairman of Casino in 2005. The corporate focus shifted, not to debt reduction, but to increasingly aggressive international expansion. Casino would grow its way out of trouble.
In 2012, Casino acquired the remaining 50% of Monoprix and gained controlling interest in Brazilian retailer Pão de Açúcar and the Colombian chain Éxito. Casino acquired Naturalia the following year, and co-founded Cnova to concentrate its eCommerce efforts in 2014.
By 2015, the company was heavily indebted and sales began to decline. Naouri sought strategic partnerships with Tesco, Dairy Farm and others in an attempt to shore up profitability but it was to no avail. Critics argued that Naouri excessively prioritised market share over profitability and underinvested in digital transformation due to excessive acquisitions. The delayed response e-commerce and the shift towards omnichannel retailing left Casino unable to keep pace with competitors.
Casino’s share price fell from almost 9,500 euros in mid-2014 to under 4,000 through 2019, at which time the four holding companies which controlled Casino had more than €3.7bn of debt and derivative liabilities. Casino was forced to file for the French pre-insolvency process.
After much prevarication, Naouri finally agreed to a restructuring deal in 2023, which erased Nauri’s equity interest and gave the Czech billionaire Daniel Křetínský a 53% holding in the company. News of this deal encouraged a brief rally in the stock. Unfortunately, the relief was short-lived. More recently, the company’s debt has sunk to deeply distressed levels and at the time of writing the stock is trading at just 0.51 euros.
Allegations and regulatory troubles
On December 16, 2015, the short-seller Muddy Waters Research issued a report arguing that Casino was significantly overvalued and that its financial statements were, "literally meaningless to understanding the company’s (poor) health. They do not distinguish between what Casino owns and what it owes.”
The report highlighted dangerously high leverage and accused the company of using financial engineering to improve the appearance of its financials. The report further suggested that Casino was hollowing out the productive value of its businesses to support an unsustainable debt burden in the holding companies that controlled it.
In 2017, the European Commission investigated allegations of price collusion between Casino Guichard Perrachon SA and Intermarche. The EU Court of Justice ruled that evidence gathered from the commission’s 2017 antitrust raids on supermarkets’ premises was inadmissible since interviews with suppliers were not recorded.The court ruled in favour of Casino but the process imposed considerable strain on the company.
In May 2019, the French financial markets regulator, AMF, searched Casino's headquarters and Naouri's home in relation to allegations that Naouri paid more than 800,000 euros to a financial journalist, Nicolas Miguet, in exchange for "buy" recommendations on Casino shares. In February 2020, France's national financial prosecutor's office launched a preliminary investigation in response to concerns raised by the AMF. Naouri was formally charged with market abuse in March 2025.
Casino in the Transparently Risk Engine
Casino’s manipulation risk score deteriorated consistently between 2018 and 2023. In 2018, the system gave Casino an overall risk score of 76.7%. This was the same score to that offered by the system when Muddy Waters issued its initial report in 2015.
This score put Casino in the worst 6% of companies in Europe for manipulation risk and the worst 3% of companies within retailing. At this relatively early stage in the company’s demise, the system ranked Casino among the very worst retail companies globally for transparency and manipulation risk.
When the system issues such a poor score for a company, many factors drive the result. In the case of Casino, however, there were five main drivers identified by the Transparently system.
Valuation signals
Firms may manipulate in an effort to obtain a desired market valuation outcome. Casino’s book value-per-share was very high relative to its stock price. This situation can create an incentive for management to manipulate the share price. Casino had an exceptionally low price-to-sales ratio, which is frequently associated with premature revenue recognition or inflating sales figures.
Income quality
A significant proportion of the Casino’s income was derived from non-operating activities, which is exceptionally rare for retail businesses. Non-core businesses, joint ventures and associates, especially those overseas, delivered a very high share of the company’s net profit. At a minimum, the system identifies a high profit share from these non-core areas as a source of low transparency and thus risk to the accounts.
Working capital signals
Working capital refers to a company's current assets, such as cash, inventory, and accounts receivable, minus its current liabilities. In 2018, Casino exhibited a very high working capital manipulation risk signal. Casino demonstrated an extreme level of accounts payable in relation to total equity and exhibited an unusually high provision for bad debts, indicating that a substantial portion of trade receivables were expected to be uncollectible. Meanwhile, Casino’s cash conversion cycle demonstrated improvement in the 2018 accounts. This was inconsistent with other measures of working capital risk and potentially indicated efforts to create the appearance of better financial performance.
EBIT margin
Anomalous patterns in firms' margins are a common sign of serious accounting manipulation. Casino exhibited high margin manipulation risk due to its unusually low EBIT and gross margins. Evidence suggests that firms with exceptionally low margins can be incentivized to create a false impression of profitability.
Gearing
This was the obvious one. Casino’s gearing ratios revealed a company experiencing extreme financial stress. Companies suffering such stress have the greatest incentive to manipulate.
There were other factors driving the result, especially those related to asset quality and business manipulation, but the bottom line was that Casino’s numbers suggested exceptionally high risk of insolvency and lack of profitability.
The system indicated a high risk that the company was going under and thus had considerable incentive to manipulate. The lack of transparency due to the bulk of earnings derived from non-core business suggested considerable scope to manipulate.
Disclaimer: Views presented in this blog are the author’s own opinion and do not constitute financial research or advice. Both the author and Transparently Pte Ltd do not have trading positions in the companies it expresses a view of. In no event should the author or Transparently Pte Ltd be liable for any direct or indirect trading losses caused by any information contained in these views. All expressions of opinion are subject to change without notice, and we do not undertake to update or supplement this report or any of the information contained herein.
%20-%20Wirecard.png)
