Carrefour sales growth accelerates; Bernard Arnault steps down from board

Carrefour said revenue growth accelerated in the first quarter, driven by robust sales in Brazil and an improving performance in the core French market where hypermarket sales turned slightly positive.

Finance Chief Matthieu Malige said the quarterly performance “confirms and reinforces management’s confidence in the relevance of the transformation plan initiated in 2018”.

Carrefour, which is Europe’s largest retailer, is in the midst of a five-year plan it launched in January 2018 to cut costs and jobs, boost e-commerce investment and seek a partnership in China with Tencent.

Carrefour said it was sticking to those targets in its strategy plan.

The group also said that Alexandre Arnault would replace his father French billionaire and key shareholder Bernard Arnault on the board of Carrefour for the rest of his term that ends at the company’s annual meeting next year.

Sales reached 20.016 billion euros ($22.4 billion), broadly in line with the median of analysts’ estimates for sales of 20.096 billion in a poll for Reuters compiled by Infront Data.
Growth accelerated to 2.7 percent on a like-for-like basis, up from 1.9 percent in the fourth quarter of 2018.

Elsewhere in Europe, Spain, Italy and Belgium remained in negative territory while Brazil - Carrefour’s second-biggest market after France - put in a robust performance.

Carrefour’s plan is aimed at helping the retailer boost profits and revenues, and tackle competition from Amazon.

It also entails expanding into convenience stores to reduce its exposure to large hypermarket stores, and on having a greater focus on organic products and private-labels.

IMPROVING FRANCE

The first quarter performance reflected a stronger performance in France, where CEO Alexandre Bompard has made reviving flagging sales at large hypermarkets a priority.

French sales benefited from price cuts on Carrefour branded products in all store formats, notably through loyalty programs, as well as from strong demand for organic food.

“Carrefour was behind the curve in terms of price competitiveness against competitors. We are determined to relaunch sales growth and cost savings (achieved so far) give us resources for these investments,” Malige said.

The hypermarkets, which make 51 percent of Carrefour sales in France, have been struggling to win back customers amid fierce price competition from more nimble rivals such as Leclerc and Amazon.

Same-store sales at Carrefour’s hypermarkets rose 0.1 percent in the first quarter following a decline of 2.2 percent in the fourth quarter 2018.

Other store formats such as supermarkets and convenience stores, however, posted stronger sales growth in the quarter.

In Brazil, whose economy is slowly emerging from a recession, Carrefour’s sales growth of 6.6 percent was boosted by a relatively strong performance for the Atacadao cash-and-carry stores.

In February, Carrefour said it would step up plans to downsize the hypermarkets and it also raised its cost savings goal to 2.8 billion euros by 2020 from 2 billion previously.

Analysts have broadly backed Bompard’s plan, but they have also expressed some disappointment at the fact that they had seen little signs of a turnaround at the French hypermarkets.

Carrefour shares have risen around 12 percent so far this year, underperforming a rise of around 20 percent rise in the broader European retail sector.