PARIS — Carrefour SA surprised investors with better-than-expected first-quarter results. The French group reported a solid domestic performance as well as double-digit growth in Latin America, which was bolstered by inflation.

This story first appeared in the April 13, 2015 issue of WWD. Subscribe Today.

A turnaround strategy, initiated in 2011 to make the company younger and leaner with more investments closer to home, helped fuel Carrefour’s ninth consecutive quarter of organic sales growth in France, its core market, beating a persistently tough environment.

The world’s second-largest retailer behind Wal-Mart Stores Inc. reported domestic sales in the first three months of the year rose 3.6 percent to 9.6 billion euros, or $10.8 billion at average exchange. On a like-for-like basis, revenues in France were up 2.5 percent, driven mostly by convenience and other formats, rather than hypermarkets and supermarkets.

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Following the implementation of its everyday low-price policy and promotional activities, food sales advanced further, while nonfood sales, including apparel, “almost broke even” in France, according to Pierre-Jean Sivignon, the group’s chief financial officer, speaking Friday during a conference call with investors.

Carrefour registered total sales including gas of 21 billion euros, or $23.7 billion, up 6.2 percent on the back of favorable currency translations that were tempered by a negative impact from falling gasoline prices of 2.1 percent.

“Overall, Carrefour turned in a very strong performance,” said Sivignon, adding that as of Jan. 1, the figures also included sales from Spanish discount retailer Dia France, which the group acquired in 2014.

He said Carrefour’s “multiformat, multilocal model” is clearly having “strong momentum.”

Meanwhile, other European countries, including Spain and Italy, were recovering, with sales up 2.2 percent, he noted.

Revenues from the retailer’s international markets, excluding France, grew more strongly, up 8.4 percent, with Latin America emerging as its top performer in the first quarter. There, revenues rose 18.7 percent to 5.1 billion euros, or $5.8 billion, buoyed by favorable currency rates and strong growth in Brazil and Argentina across all formats. However, Sivignon acknowledged he would have to “keep an eye on inflation” in the region.

He added that although Carrefour in Brazil, the retailer’s second-largest country, would be technically ready for an initial public offering by the second quarter, he does not see “a market window” to go ahead with the move.

In Asia, Carrefour’s total revenues increased 6.6 percent amid a persistently frugal consumption environment in China, where organic sales were down 13 percent. The retailer has initiated an “action plan” in China to improve the market’s sagging sales. Sivignon said it would include more targeted store openings and selective renovations, as well as an improved supply chain, including the installation of new logistic centers, so-called “city commercial units.”

In addition, the group has hired a chief operating officer for China, a new post created for the region, to oversee the plan’s implementation.
On March 31, Carrefour’s total store count stood at 11,847, with 987 new units added in the first quarter, most of which fell under the convenience category and were in France, following the integration of the roughly 800 Dia units.

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