French hypermarkets plan boosts Carrefour

Carrefour gave the first indication on Thursday that efforts to revive its hypermarkets in France were paying off, driving the shares up more than 5 per cent in early trade.

The world’s second biggest supermarket chain by sales has been seeking to revive hypermarkets in France, where it is under pressure from consumers gravitating towards smaller stores, and nimbler rivals.

Carrefour parted company with Swedish marketeer Lars Olofsson earlier this year, and parachuted in veteran retailer Georges Plassat, who has embarked on a two-year turnround plan.

Sales from French hypermarkets open at least a year, excluding petrol, fell 5.7 per cent in the second quarter.

But Pierre-Jean Sivignon, finance director, said efforts to improve the hypermarkets, including moving to constant low prices for staple food items and away from higher prices punctuated by deep promotions, were beginning to make a difference.

“We are definitely at the end of the first quarter, and the second quarter, in a better position than the one we were in at the end of October last year,” he said.

But he added: “We don’t cry victory”, as Carrefour would need to see whether this continued in coming quarters.

For the first time in many quarters, like-for-like sales of food in France were now in positive territory.

“We crossed the line on that in the second quarter,” Mr Sivignon said. “That is obviously quite some news for us.”

He said sales of non-food items in France were hit by the “bizarre” weather conditions, which had adversely affected sales of summer clothing, camping equipment and garden furniture.

However, he said, there were signs of stability in non-food sales in Spain, reflecting efforts to change the non-food product mix.

A slump in sales of non-food items in southern Europe was one of the factors behind Carrefour’s profit warning last October, the fifth over a 12 month period.

Total sales in the second quarter were down 0.3 per cent at €21.7bn, with sales in the first half up by 0.9 per cent at €43.7bn.

Excluding currency fluctuations, sales from stores open at least a year and excluding petrol, fell by 0.5 per cent.

Like-for-like sales in France excluding petrol, fell 1.8 per cent, while the rest of Europe fell 3.1 per cent.

Like-for-like sales excluding currency fluctuations and petrol in Latin America rose 7.8 per cent.

Carrefour did not provide any profit guidance. However, Mr Sivignon said he was comfortable with consensus forecasts of full-year earnings before interest and tax of between €2.03bn and €2.1bn.

Matthew Truman, analyst at JPMorgan Cazenove, said: “This is a straightforward statement and the fact it is not a profit warning may reassure. All Carrefour’s challenges remain and all the question marks remain unanswered however.”