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Carrefour Shares Gain as Fourth-Quarter Sales Offer Reassurance

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Jan. 14 (Bloomberg) -- Carrefour SA, the world’s second-largest retailer, rose to a six-week high in Paris trading after fourth-quarter sales provided some reassurance for investors after November’s reduction of the company’s profit forecast.

The stock gained as much as 3 percent after the supermarket owner said revenue climbed 5.1 percent, matching analysts’ estimates. Carrefour also reported 2010 activity contribution of 2.97 billion euros ($3.98 billion), having reduced its forecast by about 130 million euros to 3 billion euros on Nov. 30. Activity contribution is a measure of operating profit.

“Carrefour trades on an undemanding valuation, reflecting the loss of confidence” caused by the reduced forecast, Dave McCarthy, an analyst at Evolution Securities in London, wrote in a research note. “With the reassurance this statement brings, the shares may perform well in the near term.”

Carrefour cut its forecast on Nov. 30 because of weak sales at Brazilian superstores, a worse-than-expected performance in France since September and adverse economic conditions in Italy, Greece and Spain. The retailer also said Brazilian writedowns would be more than three times higher than expected.

Fourth-quarter revenue climbed to 27.1 billion euros from 25.8 billion euros a year earlier, the Paris-based company said yesterday, matching the average estimate of seven analysts. Carrefour has predicted higher sales and profit through 2015 as it upgrades western European superstores. Lars Olofsson, who joined as chief executive officer two years ago, is trying to win customers with lower prices, while boosting advertising.

‘Road to Rehabilitation’

Carrefour is “kicking off the road to rehabilitation,” James Grzinic, a London-based analyst at Jefferies International wrote in a note today. Fourth-quarter sales growth surpassed Jefferies’s estimate by about 1 percent.

“The beat was from a more resilient than feared performance in mature Europe and very solid growth” in Latin America, wrote Grzinic, who recommends buying the shares.

Carrefour rose as much as 1 euro to 34.40 euros and traded at 33.60 euros as of 9:33 a.m. in Paris. The shares have risen 9 percent this year, valuing the retailer at 22.8 billion euros.

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 cperri@bloomberg.net.

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