Carrefour continued to spotlight the positive effect of its strategic initiatives as it announced its Q2 results, which showed an acceleration in group like-for-like sales growth. The retailer said like-for-like sales growth was 3.9% in Q2, versus 3.2% in Q1, driven by its supermarkets and convenience stores in France and operations in Eastern Europe and Latin America.
Hypermarkets hold back positive performance in France
In its home market Carrefour said like-for-like sales rose 0.7%, while in total and organic terms they fell by 1.6% and 0.5% respectively. Overall its hypermarkets affected its performance, with like-for-like sales in the channel falling by 1.1%, while organic sales contracted by 1.8%. As part of its attempts to turnaround the performance of the channel, Carrefour said it continued to reduce and reallocate ‘underproductive selling space’ in its largest stores. Its underperformance at its hypermarkets was offset by growth in its supermarkets, where like-for-like sales increased by 2.5%, and its convenience / other formats, where they increased by 2.7% in the same terms.
The retailer reported a ‘satisfactory’ in food categories, where like-for-like sales rose by 1.9% in Q1 and by 2.0% in Q2. However, underlining the challenges faced by its hypermarkets, Carrefour said non-food categories remained ‘difficult’, with like-for-like sales contracting by 7.1% in Q2 after seeing sales shrink by 5.4% in Q1. It continued to invest strongly in prices across all channels, while it said it had enjoyed ‘strong growth momentum in organic, ecommerce and convenience formats’.
Europe shows divide between east and west
At a total European level Carrefour said total sales rose 0.6%, while like-for-like sales were flat. In like-for-like terms, though, there was a separation between its operations in Western Europe, where they were flat or contracted, and those in Eastern Europe, where they rose.
By country, the retailer said like-for-like sales were flat in Spain, fell in Italy (-1.6%) and Spain (-2.2%), but increased in Poland (+5.7%) and Romania (+3.8%). As it looked to turnaround its performance in Italy, it said it would continue to implement the transformation plan it launched in February, which it noted had affected its like-for-like sales as it invested to make it more competitive. In Belgium it said its performance had been influenced by a deterioration in the market due to the combination of low inflation and strong competition.
Further acceleration in growth in Latin America
In Latin America, Carrefour reported like-for-like sales in the second quarter rose 15.9%, which it said reflected ‘strong commercial momentum’. Its operations in Brazil continued to stand out with like-for-like sales rising 7.7% and new stores adding a further 5.3%. Its Atacadão banner continued to enjoy a positive performance, with this supported by a return to strength for its other channels, such as hypermarkets and convenience stores.
Performance enables Carrefour to confirm 2019 outlook
Its performance in its second quarter enabled the retailer to confirm its 2019 outlook. As such, Carrefour confirms the financial targets set out in its 2022 transformation plan:
- A cost-reduction plan of €2.8bn on an annual basis by 2020 (€2.6bn excluding China
- The disposal of non-strategic real estate assets for €500m by 2022
- €5bn in grocery ecommerce sales in 2022 (€4.2bn excluding China)
- €5bn in sales of organic products in 2022 (€4.8bn excluding China)
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