Carrefour Cites ‘Difficult’ Retail Environment as Sales Rise

Carrefour SA (CA), the world’s second- largest retailer, reported a 1.5 percent increase in first- quarter sales as Latin American demand and new stores in Asia more than made up for declines in southern Europe.

Revenue rose to 22.5 billion euros ($29.6 billion), the Boulogne-Billancourt, France-based company said today in a statement. The median of 15 analysts’ estimates compiled by Bloomberg was 22.6 billion euros. Sales at stores open a year or more fell 0.1 percent, excluding currency moves and gasoline.

Carrefour is scaling down European investment, including halting a revamp of its largest stores, adding more “drive” pick-up points and cutting prices as consumers shop locally and online for groceries and at specialists for non-food items. Georges Plassat joined this month as chief operating officer. He will become chairman and chief executive officer after the annual shareholder meeting June 18, replacing Lars Olofsson.

“The trends we observed this quarter and the persistently difficult trading environment confirm our determination to pursue the execution of our Reset plan in France, focus on cash and cost efficiency, further extend our Carrefour-branded product offer and continue expanding in emerging markets,” Olofsson said in the statement.

The shares rose as much as 3.1 percent to 16.58 euros and traded at 16.38 euros as of 10:06 a.m. in Paris, giving the company a market value of 11.1 billion euros.

Price Perception

Carrefour’s price perception with its clients is improving, Chief Financial Officer Pierre-Jean Sivignon said today on a call to analysts.

“Group sales growth was lackluster,” James Grzinic, an analyst at Jefferies in London, wrote today in a note to clients. While Carrefour’s performance in Brazil was strong, it was mixed in France and emerging markets and southern Europe is getting worse, said the analyst who recommends holding the stock.

In France, like-for-like sales fell 0.3 percent, excluding gasoline and currency moves, as shoppers abandoned Carrefour’s largest stores, or hypermarkets, particularly for non-food items. The decline partly reflects the anticipated short-term effects of a new commercial mix and more Carrefour branded products on shelves, the grocer said.

French Drop

French hypermarket sales decreased 3.1 percent on the same basis, while supermarket sales rose 1.8 percent and other formats, which include convenience stores, surged 9.8 percent.

In the rest of Europe, like-for-like sales declined 3.8 percent, excluding gasoline and currency moves, led by Greece and Spain, even as sales climbed in Belgium and Poland. Spain is a two-tier country in terms of consumer spending power and the gap between the north and south of the country is widening in this respect, Sivignon said.

Photographer: Balint Porneczi/Bloomberg

A customer exits a Carrefour Market store, operated by Carrefour SA, in Paris, France. Close

A customer exits a Carrefour Market store, operated by Carrefour SA, in Paris, France.

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Photographer: Balint Porneczi/Bloomberg

A customer exits a Carrefour Market store, operated by Carrefour SA, in Paris, France.

In Latin America, like-for-like sales surged 8.6 percent, excluding gasoline and currency moves. In Asia, sales climbed 6.1 percent on a reported basis as Carrefour opened two hypermarkets, adding 5,000 square meters of selling space. On a like-for-like basis Asian sales declined 4.3 percent, hurt by non-food sales in China.

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net

To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net

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