Carrefour business on track after Q1 sales rise

Reuters

PARIS: Carrefour, the world’s second-biggest retailer, has told investors it is comfortable with market expectations of higher profits this year, after reporting a pick-up in sales growth in the first three months, driven by its performance in Spain and Italy as well as Brazil.
The French group’s share price were up 4 percent at 26.15 euros by 0936 GMT.
“Reassuring trading update,” said Exane BNP Paribas analysts, adding that remarks made by Chief Financial Officer Pierre-Jean Sivignon’s on the profit outlook were “encouraging at this early stage in the year.”
Sivignon told reporters on a conference call that market estimates for full-year 2016 earnings before interest and tax (EBIT) of around 2.5 billion euros were “reasonable” at this stage, which would imply a rise of around 2 percent on last year’s reported figure of 2.45 billion euros.
However, he cautioned it was early in the year and that currencies were very volatile.

“Carrefour is well-positioned to continue delivering profitable growth,” Sivignon also told an analysts call.
Europe’s largest retailer said first-quarter sales were 20.05 billion euros ($22.58 billion), in line with the average of analysts’ estimates of 20.04 billion euros according to a ThomsonReuters poll.
Stripping out the impact of lower oil prices on its fuel sales, as well as exchange rate moves, the underlying revenue increase was 3.2 percent on a year ago, up from the 2.4 percent pace of growth in the fourth quarter of last year.
Last month Carrefour said it would renovate and open more stores to keep its European turnaround on track, while warning it would take time to revive its loss-making Chinese business.
Carrefour has suffered from its reliance on hypermarkets, which it pioneered, as customers shift to local and online shopping.
In response the company, which generates some three quarters of its sales in Europe, has cut prices and costs, accelerated expansion into convenience stores, refreshed stores and has given greater autonomy to managers, beginning in France.
Closely-watched same-store sales at Carrefour’s French hypermarkets were down 0.6 percent, however, having declined 0.7 percent in the fourth quarter due in part to tough comparables.
In Brazil, Carrefour’s second-largest market after France, same-store sales rose 9.9 percent in the quarter.
Carrefour has been able to better weather the Brazilian slowdown than French peer Casino as it sells mostly food there and is less vulnerable to reduced consumer spending.
Sales in China were down 8.4 percent in the quarter, an improvement on a fall of over 15 percent in the fourth quarter 2015, which Sivignon said was volume-driven.
Carrefour is pursuing a plan there to expand in e-commerce and convenience stores and open logistics centers to cut costs and focus more on fresh products.
Carefour has said it expected these actions to have an impact on China by end 2016-early 2017.