Carrefour Sales Meet Estimates on French Hypermarket GainAndrew Roberts
Carrefour SA, France’s largest retailer, said domestic hypermarket sales rose for the first time in more than two years as its turnaround gathered pace, sending its shares to the highest price since 2011.
Revenue at French hypermarkets open at least a year gained 1.9 percent in the third quarter, Boulogne-Billancourt, France-based Carrefour said today in a statement. The measure last showed growth in the second quarter of 2011.
Lower prices and refurbished outlets are helping Carrefour stage a revival in its home market, where sales have barely grown in the past decade. The stronger performance in France is also compensating for weakness in regions including Latin America, where adverse currency movements have been a hindrance.
“The continued improvement in France and peripheral Europe offers further reassurance that the earnings recovery baked into the shares should come through,” said John Kershaw, an analyst at Exane BNP Paribas in London who rates Carrefour outperform.
Carrefour shares climbed as much as 3.3 percent in Paris trading and were up 2.9 percent at 27.58 euros as of 9:38 a.m. The intraday high was the most expensive price for the stock since May 6, 2011.
Chief Executive Officer Georges Plassat has pledged to give more control to French store managers and maintain low prices on food. His strategy for a domestic revival also includes putting more non-branded goods on shelves and adding so-called drives, or pick-up points for online orders. Earnings in France jumped 75 percent in the first half of the year.
All French store formats showed growth in the third quarter, Carrefour said today. Excluding gasoline, revenue at domestic hypermarkets open at least a year rose 3 percent and supermarket sales gained 2.7 percent, both exceeding analysts’ estimates. Convenience-store sales advanced 5.9 percent.
Sales in the rest of Europe were weighed down by a tough consumer climate, falling 1.9 percent, excluding gasoline. Declines in Italy and Spain were smaller than analysts had anticipated.
The retailer is focusing on Europe, Latin America and China after retrenching from markets where it viewed its prospects as weak, Plassat said earlier this month. Since he joined last year, Carrefour has exited countries including Colombia and Greece and agreed to enter selective African markets with a partner.
Analyst estimates for full-year recurring operating income of 2.19 billion euros are “reasonable,” Chief Financial Officer Pierre-Jean Sivignon said today on a conference call.
Total third-quarter revenue declined 1.3 percent to 21.1 billion euros ($28.7 billion), matching the median of 11 estimates compiled by Bloomberg.