French retailer Carrefour. (Photo: Stock File/FIS)

Carrefour starts seeing light at the end of the tunnel

FRANCE
Friday, October 12, 2012, 03:20 (GMT + 9)

French retailer Carrefour might finally be heading toward recovery now that sales have risen, if modestly, in its fiscal third quarter in France.

Carrefour has been impacted by the weakened economy in Italy and Spain, but its core French operations have considerably improved, instilling hopes that new CEO Georges Plassat’s strategy may be doing the job.

In Q3, overall revenue jumped by 2.1 per cent to EUR 22.63 billion, with like-for-like sales climbing by 0.2 per cent.

“[This] demonstrates that Carrefour’s performance is stabilizing in France and the action plan by new CEO Plassat is starting to bear fruits,” Nicolas Champ, an analyst at Barclays Plc, said, Bloomberg reports.

Shares went up by as much as 5.6 per cent to EUR 16.89, the steepest intraday jump since 30 August.

Domestically, overall sales increased by 1.2 per cent and the company said it saw growth in sales at both its hypermarkets and supermarkets, which have been struggling. Sales from c-stores went up by 3.1 per cent on a LFL basis (excl. fuel), supermarket sales were flat and hypermarket sales were down 3.3 per cent but still marked a 2 percentage point rise compared to Q2, NamNews reports.

“We believe Carrefour’s momentum will improve only gradually and it will take time to rebuild confidence with investors,” Champ said.

France makes up more than 40 per cent of sales, Reuters reports.

Sales in Latin America climbed by 5.2 per cent (12.8 per cent excl. currency shifts) and the fastest growth was seen in Brazil.

In Asia, sales jumped by 12.3 per cent, but only grew by 1.1 per cent on a constant-currency basis, due to the economic slump in China. And in Western Europe, sales skid by 2.2 per cent, as growth in Belgium was counterbalanced by weak activity at its stores in the southern part of the continent.

Carrefour CFO Pierre-Jean Sivignon said the firm was “comfortable” with analysts’ agreement that the full-year operating profit would reach EUR 2.07 billion - EUR 2.1 billion, before interest and taxes (EBIT), versus EUR 2.18 billion last year.

Arnaud Joly, an analyst at CA Cheuvreux, however, was not too optimistic.

"In all, a rather reassuring publication. That said, we fear a quick deterioration in consumer spending in France and we believe that the consensus for 2013 is still overoptimistic," he wrote.

Related articles:

- Carrefour to cut its workforce in France
- Carrefour to leave Singapore

By Natalia Real
editorial@fis.com
www.fis.com

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