Casino has insisted it expects to see “encouraging results” in France from the pricing initiative it implemented late last year, even though the move failed to lift the retailer’s domestic revenues in the first quarter.
The company revealed a 33.7% increase in group sales late yesterday (18 April), but falling sales in France. Revenues in its domestic market were down 3.4% to EUR4.31bn (US$5.65bn) as it failed to benefit from its price-cutting policy.
Same-store sales from Casino’s Géant hypermarkets were down 10.2%, with same-store food sales falling 7.7%. Sales at its namesake supermarkets dropped 8.3%.
Chairman Antoine Guichard, outlining the group’s results on its earnings call yesterday, told analysts that despite the sales declines, the retailer had seen a “progressive improvement” by the end of the quarter. Revenues were showing “a real improvement”, he insisted.
“We are seeing signs that are encouraging, in our view, of the way our competitors look at us,” Guichard said. “Even what is happening in stores, we see that our product categories where the pricing is down there are encouraging signs. So we are convinced that if we stick to the right strategy with the right period of time, we should see encouraging results.
“When we look in detail at the first results of the price reductions … we need to stick to that, it takes time and we do need to do it step by step.”
Guichard said, of its hypermarkets in particular, that there was “no reason” why Casino could not be efficient in this segment if it follows the rules of “right prices and in the right structure”.
“If you want to be active in this segment you have to play by the book and this is something which is true in all geographies.
“In order to [achieve growth] we need really to simplify the way we execute, operate with lower costs, and be efficient at all levels of the hypermarket organisation. Once this is done, if you operate with lower operational costs you can be efficient and you can offer lower prices.”
Guichard said the group has been implementing cost reduction initiatives across the group in order for the pricing programme to be successful.
“This is a recurring investment that you do quarter after quarter. You finance your reduction in prices by recurring savings in costs. To fund those price cuts,we have identified some marketing expenses but on the top of that we have cut our operational costs and are working more efficiently in some stores and central functions. It’s a combination of savings programmes that will help us finance these price reductions.
“The bulk of it has been done today but we probably have another couple of months rather than quarters of adjustments to ensure we end exactly where we want to end.”
Guichard, however, says he is confident Casino is “close to where we should be to compete with the competitors”.
He added: “When we look at our price position today, for national brands in hypermarkets for the top selling categories, we are on a par with the best in class, so we are really back in the pack of the best banners for prices in hypermarkets.”
Its closest rival, Carrefour, yesterday revealed a decline in first-quarter sales but a “resilient” domestic performance. The retailer, which has faced a number of well-documented issues in France, appeared pleased with the results.