Carrefour Brazil reports strong growth in Q2

Date : 31 July 2019

Oliver Butterworth

Retail Analyst

Carrefour Brazil has reported consolidated sales of BRL15.3bn (US$4bn) for Q2 2019. Gross sales accelerated from +9.9% in Q1 to +13.5% (ex-petrol) in Q2. Like-for-like (LFL) sales were +7.7%, more than double what they were in Q2 2018.

Sales for Carrefour Retail grew by 10.6% demonstrating how Carrefour’s 2022 transformation plan and Act for Food strategy are successfully driving spend in its existing estate. Sales for its Atacadão cash and carry stores grew by 14.8%, partly driven by new store openings.

Brazil will be Carrefours fastest growing market to 2023

Brazil is Carrefour’s second biggest market outside of its home market, France. It is set to be by far the fastest growing country for the retailer in sales terms. We forecast that it will continue a double- digit expansion to 2023.

Source: IGD Retail Analysis

 

Expansion, especially in the cash and carry channel, but also online, will underpin its performance in Brazil.

Source: IGD Retail Analysis

 

New store openings contributing to strong sales growth

Sales from new store openings accounted for 5% of Carrefours sales growth in Q2. In the first half of the year the business opened nine Atacadão stores, two Carrefour Market’s and one Express convenience store. The business is set to continue its rapid expansion of the Atacadão banner and is on track to reach its full year target of 20 stores in 2019.

Atacadão hits double-digit sales growth for fourth consecutive quarter

Atacadão posted gross sales of BRL10.4bn (US$2.8bn), a 14.8% year-on-year increase. This is the fourth consecutive quarter of double-digit sales growth for the banner. New store expansion accounted for 7.3% of Atacadão sales growth in Q2, driven by five new openings in the quarter.

‘Atacadão’s EDLP model and further expansion drove another quarter of growth’ Noël Prioux, CEO of Grupo Carrefour Brazil

Carrefour Retail delivers its highest quarterly increase in five years

For its non-wholesale formats, Carrefour reported LFL sales growth of 8% in Q2. This is its highest quarterly increase in the last five years. Total sales for the quarter were BRL4.9bn (US$1.3bn) (including petrol), as a result of what Carrefour said were solid market share gains.

Carrefour’s proximity stores are also performing well, particularly its Express format which delivered double-digit LFL sales growth in Q2.

Food transition strategy is driving solid sales performance in hypermarkets

Carrefour’s hypermarkets have seen consistently strong LFL growth since mid-2018. This has been largely down to Carrefour Brazil’s food transition strategy, which has benefitted from Carrefour Groups global Act for Food campaign.

The business has placed greater emphasis on its fresh and healthy food offering. It has also reviewed its pricing strategy for healthy food, with the aim of making it accessible to all customers. It has implemented healthy food aisles in 59 of its hypermarkets, with a target of having these in all stores by the end of 2019.

As a result of this, products in the healthy category saw a 34% sales increase in Q2. Carrefour has also been enhancing its organic offer and launching many of its own-brand organic products. This has seen organic food sales grow by 82% in the first half of 2019.

Ecommerce remains fastest growing channel

Ecommerce was Carrefour Brazil’s fastest growing channel in Q2 and now represents 11% of its total sales. In Q2 Carrefour’s GMV (Gross Merchandise Volume) saw a 60% growth to BRL451m (US$119m), a growth which the retailer said was over five times the pace of the market. Through several different ecommerce initiatives, Carrefour is growing the number of visitors, orders and average ticket size.

In partnership with Rappi, Carrefour is offering last-mile delivery services in 22 cities and it has opened dark stores (parts of the store inaccessible to walk-in customers and used by staff for fulfilling Rappi orders) in three of its São Paulo hypermarkets. It has now opened 17 ‘Drives’ for drive-through collections of online orders and click and collect points have been installed in over half of its hypermarkets.

Enhancing its ‘omnichannel ecosystem’ and developing digital technologies continue to be a key part of Carrefour’s strategy and the business will maintain high levels of investment in these areas.

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