...Price Investment Will Continue to Hold Back Operating Margins European food retailers continue to adapt their business models to ensure that price investments and value for money are at the forefront of their customers perceptions. This should lead to increased footfall and volumes for the largest companies, although operating margins will remain under pressure from the fierce pricing environment. Free cash flow generation in 2014 may only moderately increase and the overall amount of de-leveraging across the sector will be small. The sector credit profile is therefore unlikely to change significantly in 2014. What to watch Continued Price Investments: Virtually all major EMEA food retailing groups have continued to use price investments to optimise their price-matching strategy in 2014. With fierce competition over prices still prevalent and customers still looking for value-for-money products, price investment will continue in 2014 and will dampen operating margin increases from anticipated...
