PARIS — Carrefour SA reported an up-and-down performance in the first half of the year, negatively impacted by slowing sales in France and China on the one hand, but helped by strong growth in Spain and Latin America on the other.
“Since the beginning of the year, France has remained competitive and, to some extent, tough,” divulged Pierre-Jean Sivignon, the group’s chief financial officer, speaking during a conference call with investors on Thursday.
He pointed out that the group’s performance nevertheless remained “solid” on the back of tough comparables, with its “multiformat and multichannel” strategy enjoying “strong momentum.”
Sales in France, Carrefour’s core market, advanced 3.1 percent in the first six months of the year to 19.7 billion euros, or $22 billion at average exchange rates.
On a like-for-like basis, domestic revenues were up 1.7 percent, driven mostly by convenience and other formats, rather than hypermarkets and supermarkets, which the group has vowed to revamp to increase consumer experience, keep the price image and improve offering.
The conversion of 640 Dia stores, which the group intends to keep following the acquisition of 800 units in 2014, to existing Carrefour banners is in full swing and is expected to be completed within the next two years, he said.
According to Sivignon, non-food sales in the second quarter had a negative impact on the domestic market. “The reason for this is coming from electronics,” he said. “Also, last year we had solid traffic and like-for-like driven by promotion related to the World Cup, so the comps were difficult,” he acknowledged.
“Carrefour’s relatively weak numbers in France should, however, be seen in the context of two consecutive years of positive like-for-like sales growth in France,” Barclays analysts said in a note to investors, lauding the group’s better-than-expected performance in Spain, “confirming that the economic environment is gradually improving in this country and Carrefour is well positioned to benefit from the trading up.”
Sales of both, food and nonfood, were positive in Spain, which gained 2.8 percent like-for-like in the second quarter. “These are the best [results] we have seen in years. Spain was the first country where we started renovating stores in the heart of the crisis. There is quite a lot of pride in the group around Spain,” Sivignon divulged, adding that “overall investments to modernize and raise standards of the store network” have paid off, making “other European countries an additional source of growth for Carrefour.”
Divided were also international markets, which climbed 6.7 percent to 22.6 billion euros, or $25.2 billion, in the first half, buoyed by Latin America. The region was up 11.5 percent like-for-like, with Brazil, most importantly, withstanding currency headwinds and an economic slowdown.
Sales in Asia, meanwhile, slipped 10.4 percent, caused by slowing consumption in China, which lost 12.3 percent on a like-for-like basis.
Sivignon said “the multiformat was essential in going forward in China. We are working on proximity stores and e-commerce in particular.”
With reference to the current market consensus for the group’s 2015 earnings before interest and taxes of 2.51 billion euros, or $2.78 billion, to 2.53 billion euros, or $2.8 billion, Sivignon said he considers the figures “reasonable,” though currency should be an element kept in mind for the remainder of the year, he cautioned.
The world’s second-largest retailer behind Wal-Mart Stores Inc. reported sales rose 5 percent in the first half on the back of a negative impact of petrol prices, which dented the group’s results by 1.6 percent.
Organic growth in the period was up 2.9 percent.
Second-quarter results mirrored the first-half trend, with domestic sales up 3.3 percent driven by convenience and other formats, and international markets showing continued strong growth, up 5 percent, in Brazil and Argentina in particular.
In organic terms, Carrefour’s international sales advanced 2.6 percent.
“Overall, this sales publication supports our view that 2015 will likely be a transition year for Carrefour in France, although we think it remains a very well-managed company,” the Barclays analysts concluded.
Shares closed at 30.97 euros, or $34.35, up 2.8 percent.