Carrefour Reports Solid Sales, Boosted by Brazil

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Carrefour CEO Georges Plassat pictured in March. He took the helm of Carrefour in 2012 after the retailer endured years of declining sales and strategic missteps. ENLARGE
Carrefour CEO Georges Plassat pictured in March. He took the helm of Carrefour in 2012 after the retailer endured years of declining sales and strategic missteps. Photo: Reuters

PARIS—French retailer Carrefour SA CRRFY -0.71 % reported sales slightly ahead of market expectations Friday, boosted by good performances in Brazil and Southern Europe and a nascent recovery in China.

Investors overlooked a drop in overall revenue, hit by lower gasoline sales and currency pressure in emerging markets.

The company, which vies with Tesco TSCDY -2.05 % PLC for the title of the world’s second-largest retailer after U.S.-based Wal-Mart Stores Inc., WMT -0.51 % said sales for the three months ended March 30 declined 4.3% to €20.1 billion ($22.64 billion) from a year earlier, due in part to currency losses and lower revenue from gasoline. Analysts had expected sales of €20 billion.

But on a like-for-like basis, excluding currency and calendar effects and gasoline sales, revenue rose 3.1%, following a solid performance from Carrefour’s businesses outside of France.

Analysts applauded the sales update and the improvement in Asian operations. Shares were up 3.9% in morning trading.

In France, where Carrefour does almost half of its business, sales were flat at €9.3 billion. The company said, however, that food sales had grown in the first quarter for the fourth consecutive year.

International sales grew 5.3% on a like-for-like basis, with Latin America the standout performer. In Brazil, where the economy is in recession, like-for-like sales grew 9.9% as all Carrefour’s formats expanded. Asia sales fell 4.9% on the same basis as the retailer continued to restructure its operations in China.

“Remarkably, we see signs of improvement in the Asian operations,” said Jia Man Neoh, analyst at S&P Global Market Intelligence, pointing to better numbers out of China and the fact the decline in Asia has halved since last year.

With currency effects included, however, sales in Latin America were down 15%, within which Brazil fell 13%, while sales in Asia were down 7.1%.

Chief Executive Georges Plassat took the helm of Carrefour in 2012 after the retailer endured years of declining sales and strategic missteps. Having returned the company to growth, Mr. Plassat is restructuring Carrefour’s operations in China and working to increase nonfood sales in Europe. He is also seeking to reduce Carrefour’s reliance on large hypermarkets, which account for roughly 50% of the company’s sales, in favor of smaller convenience stores.

On Thursday, rival Groupe Casino SA CGUSY -0.74 % reported an 11% decline in first-quarter revenue, as the supermarket operator’s exposure to Latin America offset sales growth in France.

Pierre-Jean Sivignon, Carrefour’s chief financial officer, said analyst expectations for earnings before interests and taxes of €2.5 billion for the current year seemed “reasonable.”

Analysts at Bryan, Garnier & Co. applauded the “very solid” sales update and called on management to clarify the retailer’s long-term strategy to give renewed momentum to the share price.

Related

  • Wal-Mart Cuts More Staff at Headquarters(2/25/16)
  • Tesco Shares Fall as Company Warns on Profit (4/13/16)
  • Groupe Casino Sales Hit by Emerging Market Currencies(4/14/16)

Nick Kostov at Nick.Kostov@wsj.com



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