Carrefour Says France Improving as Quarterly Sales RiseAndrew Roberts
Carrefour SA, France’s biggest retailer, rose to a 17-month high as a strategy of holding down food prices attracted customers and helped ease sales declines at its largest stores for a second consecutive quarter.
Revenue at hypermarkets in France open at least a year fell 2 percent in the fourth quarter, an improvement from declines of 3.3 percent and 5.7 percent the previous periods, as food sales rose for the first time in more than two years, Carrefour said today in a statement. The figures exclude gasoline.
Chief Executive Officer Georges Plassat, seeking to counter a stalling French economy and recessions elsewhere in Europe, has pledged since taking his post in April to maintain low prices on food and reducing the number of promotions. Gross domestic product in France rose 0.1 percent in the third quarter, half the rate calculated earlier by the government, and the economy probably shrank 0.3 percent in the fourth, according to analyst estimates compiled by Bloomberg.
“Despite the market fears, Carrefour delivered a good performance in France,” John Kershaw, an analyst at BNP Paribas in London, said today in a report to clients, citing better-than-expected hypermarket sales. Plassat’s strategy “to improve price perception and simplify the offer clearly is getting traction and, we think, full-year French profits could also be better than expected.”
Carrefour jumped as much as 8.5 percent to 20.96 euros, the highest intraday price since Aug. 1, 2011, and was trading up 8.4 percent at 1:34 p.m. in Paris. The stock has risen 23 percent in the past 12 months, valuing the retailer at 14.9 billion euros ($19.9 billion).
While it’s too early to say whether Carrefour has “turned the corner in France,” the quarterly progression in domestic performance provided “some encouraging signs that our commercial and pricing strategy is bearing fruit,” Chief Financial Officer Pierre-Jean Sivignon said today on a conference call.
Competitor Casino Guichard-Perrachon SA said on Jan. 15 that household consumption was “soft” in the fourth quarter in France, where the company reported declining revenue in the period.
Fourth-quarter group revenue rose 0.8 percent from a year earlier to 22.9 billion euros, boosted by a gain of 4.8 percent in Latin America, Boulogne-Billancourt, France-based Carrefour said. Total French sales increased 0.6 percent, it said.
Global fourth-quarter same-store sales, excluding currency shifts and gasoline, rose 0.4 percent. Carrefour kept its recurring operating-income forecast, saying it’s “comfortable” with the consensus estimate of 2.07 billion euros.
Sales at Carrefour outlets of all types open a year or more in France fell 0.8 percent in the fourth quarter, versus a 1.5 percent decline in the three months through September. Hypermarkets accounted for 57 percent of revenue from France, with supermarkets generating 32 percent and convenience stores and other formats providing 10 percent, according to Carrefour. Food accounts for more than 80 percent of Carrefour revenue excluding gasoline, Sivignon said.
In the rest of Europe, same-store sales fell 3.9 percent, excluding currency movements and gasoline, led by declines in Italy and Spain. Government austerity measures continued to affect consumption in Spain, while Italy was affected by a more intense competitive and promotional environment, Carrefour said. Latin American sales on that basis jumped 11 percent following Carrefour’s acquisition of the Eki chain in Argentina in June.