July 16 (Bloomberg) -- Carrefour SA, Europe’s biggest retailer, gained in Paris trading after reporting a 6.3 percent increase in second-quarter sales and forecasting better-than-expected full-year operating profit.
Revenue rose to 24.9 billion euros ($32.1 billion) from 23.4 billion euros a year earlier, the Paris-based company said yesterday after markets closed. Excluding currency swings, sales gained 2.2 percent. The shares advanced as much as 1 percent.
So-called activity contribution, or operating profit, is expected to be about 1.1 billion euros in the first six months of 2010, Carrefour said. For the full-year, the measure should reach 3.1 billion euros, compared with 2.8 billion euros last year, the retailer said. The average estimate of 15 analysts surveyed by Bloomberg is 2.9 billion euros.
“The activity contribution is good news,” Fabio Fazzari, an analyst at Equita Sim in Milan said in a phone interview.
Carrefour is pumping investment into discounts and advertising to increase market share in France, which accounts for 40 percent of revenue. The retailer is also shifting its international focus on markets where it thinks it can be a leader, such as Latin America and China. Carrefour added 222,000 square meters of shop space during the quarter, opening or acquiring 293 stores and expanding others.
“We expect the environment to remain challenging,” Chief Financial Officer Pierre Bouchut said on a conference call. “Growth in China and Latin America should remain solid but we remain prudent about the outlook” in Europe.
Carrefour rose 9 cents to 35.43 euros at 9:14 a.m. in Paris trading. The shares have gained 5.6 percent this year, giving the company a market value of about 25 billion euros.
Sales at stores open at least a year grew 0.3 percent in the quarter, Carrefour said. In France, same-store sales rose 2.6 percent as the combination of lower prices and increased advertising paid off. Market share widened by 80 basis points on a like-for-like basis in the first half, Bouchut said.
Same-store sales at French superstores gained 0.8 percent in the quarter, boosted by an increase in average basket value. Carrefour is reviewing the store format and will open pilot units in the country this fall as it looks to boost sales per square foot, Chief Executive Officer Lars Olofsson said in May. French supermarket same-store sales grew 5 percent, while revenue at so-called hard-discount outlets declined 11 percent, the company said.
Same-store sales in western Europe, excluding France, fell 4.9 percent. Revenue slid 4.4 percent in Spain, 3.5 percent in Italy and 8.6 percent in Belgium, where Carrefour this month agreed with labor unions to close 16 unprofitable stores. The retailer plans to invest about 300 million euros in its Belgian business in the next three years, signaling its confidence in the market’s “value creation potential,” Bouchut said.
Sales in other European markets, such as Poland, Turkey and Greece, declined 5.8 percent on the same basis. Carrefour’s business in southern Europe “is definitely being affected by the recent austerity measures, which result in reduced consumption,” Bouchut said.
In Latin America, total second-quarter sales gained 34 percent after Carrefour opened or acquired six superstores, 24 hard discount stores and 14 convenience stores, boosting market share. Same-store sales jumped 6.4 percent led by Atacadao cash & carry units in Brazil, the retailer said.
Second-quarter Asian sales increased 21 percent, led by China, where Carrefour plans to add 22 hypermarkets and 140 discount stores this year. The retailer also said it agreed to buy 51 percent of Chinese superstore operator Baolongcang to expand in the Hebei region.
“We expect that success of our Baolongcang venture will help us in the future to convince other Chinese entrepreneurs to join Carrefour and will boost our expansion through similar local partnerships,” Bouchut said.
To contact the reporter on this story: Andrew Roberts in Paris at Aroberts36@bloomberg.net.
To contact the editor responsible for this story: Celeste Perri at firstname.lastname@example.org.