Carrefour Gets Brazilian Sales Boost Ahead of Unit's IPOBy
Brazilian revenue gains 5.6% on Atacadao cash-and-carry chain
Long-planned IPO of unit is planned for later this year
Carrefour SA’s plan to sell shares in its Brazilian unit got a boost as the retailer’s sales in the country surged, flying in the face of record unemployment and a weakening economy.
Revenue in Brazil rose 5.6 percent on a like-for-like basis in the first quarter, outpacing the 1.4 percent gain in group sales, the French grocer said Thursday.
The results show the attractions of the company’s operations in Brazil, which include the Atacadao cash-and-carry chain and Express convenience stores. A long-planned initial public offering of Carrefour’s operations in the country is scheduled for 2017, with the benchmark stock index having hit a five-year high in February.
Carrefour shares were little changed in Paris trading as group sales matched estimates, rising 6.2 percent to 21.3 billion euros ($22.7 billion).
Reported sales in Brazil rose 38 percent, though most of the growth reflected the real’s rebound against the euro.
The country, which represents about 15 percent of group revenue, is seeking to stimulate stagnant demand and on Wednesday cut its key interest rate by a full percentage point. An economic turnaround is likely to translate to higher consumption later this year, Carrefour Chief Financial Officer Pierre-Jean Sivignon said on a conference call.
The retailer said its growth in Brazil reflects the progression of Atacadao and hypermarkets, as well as further convenience-store openings.
Carrefour’s French business underperformed with 0.5 percent sales growth. Tough competition and food deflation have led to continued weakness in French hypermarkets.
“We see deteriorating earnings momentum and an erosion of market share,” as Lidl and E. Leclerc gain ground, said Nicolas Champ, an analyst at Barclays Equity Research. “Carrefour needs to protect their price perception, but there is unfortunately not a lot of things they can do about food deflation. The relevant strategy is to reduce their exposure to this space.”