Carrefour has shown signs its turnaround plan has continued to gain traction in the first quarter of this year.
The company this morning (18 April) booked a 2% increase in sales, excluding currency exchange and a negative calendar effect. Total sales were down 1.3%, with FX weighing 2.6% on the result.
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Commenting on the French retailer’s performance, CEO Georges Plassat, who took the helm at Carrefour to try to turn around the ailing group’s fortunes, said he was satisfied with a “resilient” performance in “challenging market conditions”.
In particular, Plassat said he was pleased with the group’s domestic performance. For some years, Carrefour has faced a number of well-documented issues in France, where it has seen an errosion of market share. It has struggled with its price positioning – having been viewed by consumers as a high price retailer – while its hypermarket sales have been hit by the structural decline of the sector.
Speaking during an analyst call, Plassat said the company had improved or maintained its position across all of its formats in France despite “tough economic conditions” and “unfavourable weather”. Excluding the calendar effect, hypermarket revenues were up 0.2% driven by higher food sales; supermarket sales remained flat; and smaller format revenues increased 4.6%.
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Plassat said gains were driven by the company’s work to improve its price positioning, through its price guarantee initiative that promises consumers the lowest prices on supplier brand products. He emphasised management view this – coupled with an improved fresh offering – as a “key driver of traffic”.
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By GlobalDataIn France, where Carrefour generates around 60% of sales, the company recently altered its organisational structure – moving its hypermarket business to a regional model with a single head and “empowering” its local store managers in order to improve its store offer.
According to to Research Farm analyst Daniel Lucht, these efforts bode well for Carrefour. “While there is still a lot of work to do, it looks like the turnaround plan at Carrefour is broadly on track. Hypermarkets will remain difficult, but the figures look a lot more positive than in the last quarters,” Lucht told just-food.
Carrefour’s international businesses booked a stronger sales performance. Organic sales – stripping out FX and the calander impact – were up 3.5%. Revenue was driven by growth in Latin America and “stable” Asian sales. These markets allowed Carrefour to offset weakness in Southern Europe, Plassat said.
“We believe our balance between our strong position in our domestic market and leading positions in selected international markets gives us a resilient profile allowing us to withstand the challenging market conditions which we are now experiencing,” he told analysts.
Moving froward, Carrefour will continue to progress its turnaround plan by focusing on three strategic imperatives, Plassat revealed.
Firstly, Carrefour will continue to develop its “multi-format multi-local model”. Plassat said this would be achieved by “continuing the action plan in France, pursuing efforts that will add structure to the slow consumer [environment] in Europe and continuing to expansion in Latin America and China”. Secondly, Carrefour will continue to decentralise the management of its stores and, finally, Carrefour will continue to improve its “financial discipline”, closing under performing stores and opening new ones in growth markets.
Shares in the retailer remained relatively flat following the trading update, dipping 0.78% at 14:39 BST.
