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Carrefour says Spain turns positive in fourth quarter

Thursday, 16 Jan 2014 | 3:21 AM ET
Carrefour earnings boosted by Spanish recovery
Thursday, 16 Jan 2014 | 1:45 AM ET
Supermarket chain Carrefour reported 3.2 percent organic growth in the fourth quarter of 2013, boosted by success in the recovering Spanish market.

Carrefour said sales in austerity-hit Spain returned to growth in the fourth quarter for the first time since 2008, while French hypermarkets further improved though at a slower pace than the previous quarter.

Like-for-like sales growth slowed in Brazil, the group's largest market after France, however, while it turned negative in China amid slowing consumption, Carrefour said in a statement on Thursday.

The company said it was "comfortable" with the overall market consensus for 2013 earnings before interest and taxes of 2.19 billion euros ($2.98 billion).

"Carrefour accelerated sales growth in France and abroad in 2013, demonstrating that its action plans are starting to bear fruit," Chief Financial Officer Pierre-Jean Sivignon told reporters, though the economic climate remained "uncertain".

Europe's largest retailer said fourth-quarter group sales were 22.197 billion euros, for like-for-like growth of 3.2 percent excluding fuel and calendar effects.

Closely watched same-store sales at Carrefour's French hypermarkets rose 1.4 percent, a slowdown from a 3 percent rise in the third quarter.

France, which contributes more than 40 percent of group sales, is key for investors to assess whether Carrefour can finally come to grips with its problems in Europe.

(Read More: Carrefour to Boost 2013 Spending, 2012 Profit Down)

In Spain, Carrefour's third-largest market, sales rose 0.2 percent like-for-like, but the economic climate was still tough in Italy where sales were down 5.9 percent.

Carrefour has struggled for years in Europe, partly due to a reliance on the hypermarket format it pioneered as time-pressed customers shop more locally and online, and buy non-food goods from specialists.

Philippe Huguen | AFP/Getty Images

Squeezed income

Chief Executive Georges Plassat has responded in France by cutting costs, revamping stores, improving price competitiveness, simplifying product offerings and giving more autonomy to store managers.

Retailers across Europe have been struggling as shoppers' disposable income is squeezed by subdued wage growth and austerity measures. Most have responded with price cuts.

(Read More: Carrefour says French recovery gains momentum)

On Tuesday, Carrefour's smaller French rival Casino said it expected sales at its domestic hypermarkets to return to growth in the next six months as it would reap the full benefits of earlier price cuts.

Dutch grocer Ahold on Thursday reported a steeper-than-expected decline in fourth-quarter sales as the U.S. food market contracted and Dutch customers spent less.

In emerging markets, Carrefour like-for-like sales in China fell 3.1 percent after rising 1.1 percent in the third quarter. Brazil achieved like-for-like growth of 5.8 percent against 8.8 percent in the previous quarter.

Carrefour shares trade at 17.2 times 12-month forward earnings against 14.9 for Casino and 10.9 times for Britain's Tesco.


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