Carrefour Brazil delivers best quarterly like-for-like performance in five years

Date : 30 January 2020

Oliver Butterworth

Retail Analyst

Carrefour Brazil has reported annual gross sales of BRL59.4 bn* (US$14.1 bn), a 11% growth year-on year. Q4 sales reached BRL16.8 bn* (US$4 bn), representing growth of 11.4%. The performance was driven by strong like-for-like growth of 7.6%. Q4 LFL sales for its core estate was 12.7% in Q4 (up from 8.8% in Q3), its highest quarterly like-for-like (LFL) growth in five years. 


Exceptional LFL performance of core-estate

2019 revenue for Carrefour’s core estate (excluding Atacadão) reached BRL17.3 bn* (US$4.1 bn). This represents annual growth of 8.7%, which was driven almost entirely by an increase in LFL of 9.1% (expansion declined by -0.3%). Q4 sales reached BRL5 bn* (US$1.2 bn), 12.8% growth.

Carrefour’s recent strategy is driving hypermarket performance

Carrefour’s hypermarkets are performing well and continue to see market share gains, according to the retailer. The solid results of its core business in Q4 are attributed to various strategic actions the business has taken since 2018.

These include price reviews, assortment repositioning and its ongoing food transition (see more below). This was bolstered by enhancing its omnichannel proposition and exceptional sales during Black Friday.

The implementation of this strategy has also had a positive effect on the customer shopping experience. Carrefour said its net promoter score (NPS) reached a record high in Q4. 

Consistently solid performance at Atacadão

Revenue for Atacadão reached BRL11.9 bn (US$2.8 bn) in Q4, growth of 10.8%. This was driven by a combination of both store expansion (6%) and strong LFL’s (5.5%). Annual revenue for the banner reached BRL42 bn (US$10 bn), representing growth of 11.9% (5.4% LFL and 6.8% expansion).

Source: IGD Research

Carrefour reaches 2019 target for Atacadão openings…

Carrefour continues to expand its popular cash and carry and proximity banners, which contributed to 4.2% of its growth in Q4.

The business reached its target of 20 new Atacadão openings in 2019, taking its store count for the format to 186. It has opened 20 new Atacadão stores for three consecutive years and we expect it to maintain a similar pace in 2020.

Source: Carrefour

Carrefour’s strategy for Atacadão has been to expand its geographical presence and to be the first to enter new cities. It is the only retailer with a presence in all of Brazil’s states.

Source: Carrefour

…but proximity is expanding behind our expectations

Carrefour opened eight new proximity stores in 2019; three Carrefour Market and five Express stores. This is a more subdued level than we expected. At Carrefour Brazil’s investor day in March 2019, it announced it wanted to accelerate the expansion of its proximity stores in the medium term and expected to open between 20-30 proximity stores annually.

Source: IGD Research

Its Express stores continue to perform well. In Q4 it reported a fifth consecutive quarter of double-digit growth, with LFL up 24.2%. It now operates 125 Express stores, all in São Paulo. It is perhaps surprising Carrefour Brazil has not accelerated the expansion of the banner or trialled it in Brazil’s other major cities.

Ongoing expansion of health-food, organic and private label

Carrefour continues to grow its healthy and organic ranges. It has implemented health-food aisles in 82 hypermarkets, which conveniently zones ambient health food categories together in one place.

Source: IGD Research

Carrefour aims to democratise the affordability of healthy and organic products. It is making good progress with the group’s global Act for Food campaign. In Brazil it aims to provide customers with healthy, high quality food at reasonable prices. To support this, it has contributed a 30% growth of private label FMCG products. It now has 3,100 health/organic-focused SKUs, a 22% increase year-on-year. In 2019 it announced ambitious aims for the sale of its organic products to account for 20% of its total food sales by 2022.

Source: IGD Research

Carrefour now has over 2,600 SKUs of private label. The sales of private label products represented 13% of its total net food sales in Q4.

Latest advances in ecommerce

Q4 ecommerce represented 16.1% of Carrefour’s total sales (ex-petrol), up from 12.9% in Q4 2018. Gross Merchandise Volume (GMV) grew by 40.1%, with its marketplace accounting for 19% of total GMV.

Carrefour has so far implemented 110 click and collect points for the collection of non-food orders. These account for 14% of ecommerce sales. Non-food ecommerce represents 34% of total non-food sales. It has also increased the number of locations with drives/click and collect points for grocery orders from 28 in Q3 to 54 in Q4. In Q4 drive and click and collect accounted for 39% of food deliveries.

In partnership with Rappi, Carrefour continues to grow its last mile coverage. It currently fulfils last mile deliveries from 138 points of sale, across 34 cities.

Continued investment and expansion

Carrefour recently announced plans to invest around BRL2 bn (US$475m) per year to 2024. We anticipate the majority of this will be used to further expand its wholesale and proximity banners and to advance its digital transformation. At this stage, it is unclear whether the business will accelerate the pace of its proximity openings, in line with its intentions in early 2019.

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