RetailAnalysis
19 January 2017
Carrefour Q4: positive performance maintained

Carrefour has announced its Q4 and FY results, with the retailer saying the pace of total sales growth accelerated in its final quarter. In its fourth quarter Carrefour said total sales (excluding petrol and at constant exchange rates) rose 3.5% to €23.4 bn, aided by like-for-like sales growth of 2.9%. Its International operations were a key driver of performance, while in France its overall growth was limited by its hypermarkets, where sales contracted.

France: challenges at hypermarkets offset by other channels

In its home market Carrefour said that total sales rose 0.9% to €10.8 bn in its fourth quarter, with a weakness at its hypermarkets, where total sales fell by 1.3%, being more than offset by growth at its supermarkets – total sales up 1.5%, like-for-like sales up 3.3% – and at its convenience stores – total sales up by 8.4%, like-for-like sales up 2.9%. Convenience stores’ strong total sales growth has been boosted by the conversion of DIA stores to Carrefour banners, with 622 now completed.

Carrefour noted the continued challenges in the operating environment in France, with it remaining ‘very competitive and promotional’, with this playing a role in the continuation of deflation in food, which it said was c. 0.3% during 2016. To counter these developments, Carrefour said it was slowly implementing a more price-focused strategy to help drive footfall across its operations.

The results at Carrefour’s hypermarkets will be disappointing for the retailer given the investment it has made in improving its stores and the trials it has rolled out at some of them. However, Carrefour did note that its hypermarkets’ performance had been affected by the bringing forward of its Anniversary Month, which was moved to Q3 to enable it to maximise its opportunity after competitors targeted it in 2015 and that both footfall and like-for-like sales of its grocery ranges were improving.

At the company’s other channels, though, the story was more positive, with supermarkets’ like-for-like sales rising by 3.3%, while at its convenience stores, like-for-like sales were up 2.9%. Underlining the retailer’s growing multichannel focus, Carrefour said that ecommerce sales showed ‘strong double digit growth of Drives, demonstrating the increasing success of click & collect’.

The retailer called out the acquisition of Rue do Commerce and the development of its marketplace, which would have played a role in supporting its non-food sales at a corporate level, while potentially impacting its own hypermarkets. During our recent visit to the hypermarket at Villiers-en-Bière it was interesting to see how the company was linking its online presence within the store, building the links for shoppers and supporting the multichannel strategies.

Dynamic growth in Latin America

In Latin America Carrefour said that like-for-like sales rose 10.8%, while total sales rose 14.3% to €4.8 bn, albeit aided by a positive currency effect of 3.2%. The dynamic pace of growth was particularly pleasing for the company given the strong growth it had enjoyed during the same period in 2015, meaning it was building on strong comparables.

The news was positive across both its markets in the region, with like-for-like sales up by 15.1% in Argentina and by 9.0% in Brazil, albeit with the retailer showing a sequential slowdown in the latter, which is being affected by decelerating inflation. Its Atacadão banner remained the standout format for Carrefour, with it enjoying ‘double digit’ like-for-like sales growth and its total sales performance boosted by the opening of 12 new stores during 2016.

Like-for-like growth in all ‘Other European countries’

In its Other European countries division, Carrefour said that like-for-like sales rose by 2.5% and total sales rose 3.9%, with every country posting growth. Spain was the stand out performer for the retailer, with like-for-like sales rising by 4.1% in Q4, which it said meant it had ‘maintained its momentum’ in the country. Carrefour Spain has been investing heavily in its multichannel offer, improving its hypermarkets, such as at Alcobendas; while also adding new store designs for its Express format and Carrefour Market. Mirroring initiatives in France, Carrefour Spain is maximising the multichannel opportunity and has relaunched its online site to help it spotlight its non-food ranges, especially in apparel.

Elsewhere in the region, Carrefour said like-for-like sales had risen ‘slightly’ in Belgium and Italy, while they had seen ‘solid growth’ in Romania and in Poland. The difference in performance between markets may points to the comparatively more challenging environments in Belgium and Italy versus Spain, where an improving economy is accentuating the positive strategic investments the retailer has made.

Asia remaining the weakest link

With the positive performance across all its operations, the contraction in sales in Asia, where like-for-like sales fell 4.2% and total sales were down 2.3%, stands out. China remains a challenge for Carrefour, despite the closure of underperforming stores and growing focus on convenience stores, where it now operates 25 stores, the retailer was only able to report a ‘sequential improvement in like-for-like sales’, which were still down 5.4%. In Taiwan, like-for-like sales rose 0.2%, its performance was aided by rising footfall at its hypermarkets, while its total sales performance had been aided by the opening of 30 supermarkets in the country.

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