Carrefour Stabilizes in France as Sales Gain in Latin America

Carrefour SA (CA), France’s biggest retailer, said stronger sales in Latin America helped cushion a drop in Europe during the second quarter, while revenue at its French hypermarkets is stabilizing.

Sales at stores open a year or more were unchanged, excluding currency shifts and gasoline, Boulogne-Billancourt, France-based Carrefour said today in a statement. A 1.1 percent drop in its domestic French market beat the consensus estimate of a 1.8 percent drop, according to Citigroup Inc. analysts.

Carrefour, which has said it doesn’t expect the economic climate to improve in 2013, plans to boost capital spending this year in an effort to regain French shoppers with refurbished outlets and a broader multichannel offer. Austerity measures and rising unemployment are restraining consumer spending in Europe, while retailers including Groupe Auchan SA and Casino Guichard-Perrachon SA (CO) are competing more aggressively on price.

“Today’s data points to stability in the French sales trends at both the main formats suggesting that the recent price adjustments and renewed focus on operational execution have helped,” Citigroup’s Alastair Johnston wrote in a note.

Carrefour rose as much as 2.4 percent in Paris trading and was up 1.9 percent at 22.75 euros as of 10:45 a.m.

Carrefour sees “further encouraging signs” in its domestic business, Chief Financial Officer Chief Financial Officer Pierre-Jean Sivignon said on a call with analysts, pointing to “steady progress in price perception.”

French Hypermarkets

Revenue at French hypermarkets open at least a year fell 1.1 percent, excluding gasoline, though food sales continued to grow in the period, the grocer said. Supermarket sales decreased 1.8 percent on the same basis, while convenience and other formats gained 0.8 percent, Carrefour said.

Analyst estimates of about 2.2 billion euros for full-year recurring operating income are “reasonable,” Sivignon said, repeating an earlier forecast.

Sales in the rest of Europe “were affected by unfavorable weather conditions, which came on top of the adverse impact on consumption of the economic environment,” Carrefour said.

Same-store revenue in the region fell 4.3 percent, excluding currency shifts and gasoline, led by declines in Italy and Spain. Revenue also fell in Belgium, the company said.

Same-store sales in Latin America advanced 8 percent, excluding currency shifts and gasoline. Growth was strong in all formats in Brazil, while a regulatory price freeze continues in Argentina, Carrefour said.

The depreciation of the Brazilian real and the Argentine peso against the euro had a negative effect on sales in the region. The real has lost about 7.5 percent against the euro this year, while the peso has dropped almost 9 percent.

The full-year profit outlook relies on the real and peso not deteriorating further against the euro, Sivignon said.

In Asia, second-quarter sales fell 0.1 percent, excluding currency shifts and gasoline.

Total revenue in the quarter fell to 20.5 billion euros ($27 billion). Analysts predicted 20.4 billion euros, according to the average of eight estimates compiled by Bloomberg.

To contact the reporters on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net; Gabi Thesing in London at gthesing@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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