Casino upbeat on French outlook

Casino upbeat on French outlook

Casino has insisted that its drive to grow domestic sales and profitability will strengthen over the coming 12 months as aims to increase its share of the highly competitive French grocery market.

The retailer, which operates the Géant and Leader Price banners in France, today (1 March) booked a 7.5% increase in company-wide trading profit despite a 4.1% contraction in trading profit at home. Trading margins in France fell to 4.3%, down 55 basis points on an organic basis.

However, Casino remained upbeat on its domestic performance, insisting that investments in pricing and loyalty programmes had allowed domestic sales to gain "momentum" from quarter to quarter.

In France, total sales rose 1.7%, the company said. Same-store sales in the retailer's Franprix stores rose 0.7%. At its Leader Price chain, same-store sales climbed 1.4% and, in its Geant Casino hypermarkets, same-store sales were up 1.3%. Casino's supermarket banner saw same-store sales increase 2.4%, while Monoprix recorded 2.5% growth.

Casino said that – as part of its aim to grow sales by 10% every year for the next three years – it would increase its market share in France. This, management insisted, would be achieved by continued investment in growing its convenience and discount banners. The group added that it intends to grow profitability in the market, particularly emphasising the opportunity to drive up margins at Franprix-Leader Price.

Commenting on Casino's results, RBS analyst Justin Scarborough said that Casino had benefited from improving like-for-like trends at its Leader Price and Geant businesses. "If these LFL trends continue (certainly in 1H) then, along with a flattish margin over 2011, it should imply a reasonably good bounce back in terms of profitability," he predicted.

"We should not forget that 5% French sales growth with a flattish margin, suggests that they understand, in many cases, the maturity profile of its French business (apart from c-commerce) and the future growth of the group and thus valuation is increasingly dependent upon and linked to, its International operations," Scarborough added.