Carrefour grows in Italy for first time in five years
In the French chain's home continent of Europe, organic growth was 1.9 per cent, and in France itself sales growth in all formats was 2.4 per cent.
For the first time in five years sales in Italy were up (2.9 per cent):
“The surprise was Italy,” Pradeep Pratti, an analyst at Citigroup Inc., wrote in a note to investors. “Europe was the standout performance.”
The Italian rebound was buoyed by promotions tied to the soccer World Cup, which Germany won over the weekend. Carrefour’s total 4.9-per-cent organic sales growth was the best in at least five years, Chief Financial Officer Pierre-Jean Sivignon said on a call with reporters.
Carrefour’s performance in Italy is “encouraging but you shouldn’t draw too many conclusions” as the new management team there has only been in place a year, said Sivignon, calling the year-earlier basis of comparison easy. “The retail environment in Italy remains difficult.”
Italy Wins
Between 5 June and 13 July, Carrefour’s Italian stores refunded 50 per cent of the cost of certain products promoted on fliers and thousands of products in stores. Every time Italy won, the refund was 100 per cent. Carrefour’s pricing policy in Italy differs from France, where the company has cut promotions.
The stock rose 1.4 per cent to €27.99 at 10:17 a.m. in Paris, giving the grocer a market value of €20.6 billion.
European organic sales rose 1.9 per cent in the second quarter, compared with the first quarter’s 0.4-per-cent rate. Carrefour last month agreed to buy back the French stores of discounter Distribuidora Internacional de Alimentacion SA (DIA) as it seeks to cement a revival at home and strengthen sales in Europe, Latin America and China.
This week, Casino Guichard-Perrachon SA (CO) reported its best organic sales performance in France in more than two years and a fourth straight quarter of double-digit international revenue growth.
“Casino’s price repositioning is seeing it outperform Carrefour on hypermarkets,” said Bruno Monteyne, an analyst at Sanford C. Bernstein. “We are still to see the same trends come through on supermarkets, where Carrefour remains stronger.”
Profit Outlook
Carrefour considers the €2.38 billion consensus analyst estimate for 2014 current operating income to be “reasonable” based on current exchange rates, said Sivignon.
Second-quarter sales at stores open a year or more advanced 3.9 per cent, excluding currency swings, gasoline and calendar effects, and grew across Europe.
“Carrefour has had to address its old demons in a limited time but we remain confident the plan is moving apace,” said Gildas Aitamer, an analyst at Planet Retail. “Going forward, Carrefour is expected to benefit from a brighter outlook in a number of European markets from Spain to Poland to Romania.”
Carrefour’s domestic strategy includes maintaining low prices on food, stocking non-branded goods on shelves and adding pick-up points for online orders. The company has said it may sell a stake in its Brazilian unit next year, and there’s “nothing new to report” in that regard, the CFO said.
Source: esmmagazine.com
