Carrefour Q2 Sales Slip 0.6%

The French retailer said bad weather impacted its already weak European business.

PARIS — Carrefour SA said sales fell 0.6 percent in the second quarter as poor weather compounded a morose economic climate in Europe, though emerging markets helped to redress the balance.

This story first appeared in the July 19, 2013 issue of WWD.  Subscribe Today.

The world’s second-largest retailer behind Wal-Mart Stores Inc. reported sales of 20.46 billion euros, or $26.71 billion, in the three months ended June 30. All dollar rates are calculated at average exchange for the periods to which they refer.

“Overall, Carrefour demonstrated the resilience and the balance of its business model across its formats in the past quarter,” the company’s chief financial officer, Pierre-Jean Sivignon, told analysts during a conference call. “Our strong growth in Latin America and the rebound we saw in China allowed us to offset the difficult environments we are facing in Europe, particularly in the south.”

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Sales in France, which accounts for nearly half the group’s turnover, totaled 9.65 billion euros, or $12.6 billion, down 0.2 percent versus the same period a year ago.

“In our domestic market, we saw further encouraging signs, notably in our hypermarkets. All formats performed respectably in a tough trading environment and despite adverse weather conditions,” said Sivignon.

Sales in other European countries fell 4.1 percent to 5.24 billion euros, or $6.84 billion, though among the austerity-hit countries of Southern Europe, Spain performed better than Italy.

“Maybe Spain is getting closer to a bottom. I will be careful stating that, but that’s something we will watch very carefully in the coming quarters,” said Sivignon.

In Latin America, revenues were up 1.2 percent to 3.88 billion euros, or $5.07 billion, with the sharp depreciation in the Brazilian real and the Argentine peso continuing to take their toll. Stripping out currency variations, sales in the region rose 11.3 percent during the period.

Sivignon said Carrefour had not been affected by the massive street protests that began sweeping Brazil in June. “We are seeing no impact from these protests, but of course we remain…very vigilant on the evolution of the situation there,” he said.

In Asia, revenues rose 4.3 percent to 1.68 billion euros, or $2.2 billion. Sivignon noted that organic sales in China were up 4.6 percent in the quarter, while like-for-like sales posted their first increase since early 2011.

Although Carrefour does not provide official guidance, Sivignon noted the consensus forecast for 2013 recurring operating income remains unchanged from earlier this year at 2.2 billion euros, or $2.86 billion at current exchange.

“We continue to consider the 2.2 billion euro number reasonable, but it assumes that currencies, notably in Brazil and Argentina, do not further weaken from today’s level against the euro in the second half,” he said.