Cencosud reports a mixed supermarket performance in Q3

Date : 05 December 2019

Cencosud has reported supermarket revenue of CLP1,670.3 tr (US$2.1 bn) in Q3. In local currency this represents a 0.6% increase. The slight growth was driven by revenues in Argentina, Chile and Colombia, but partially offset by Brazil and Peru. In constant currency, revenues increased by 6.9%. This reflects the depreciation of the Argentine peso and Colombian peso against the Chilean peso.

Please note; this article focuses specifically on Cencosud’s supermarket channel and a breakdown of its supermarket performance by market. Cencosud’s total revenue would also include home improvement stores, department stores, shopping centres and financial services.

Positive results in Chile and Colombia…

In Cencosud’s home market, Chile, revenues increased 2.1% year-on-year (YoY). This was driven by positive same-store-sales (SSS) of 1.1% and two new store openings, but partially offset by four closures.

Revenue in Colombia increased by 4.4%, driven by solid SSS of 5.5%. This is its fourth consecutive quarterly increase in the country. Its SSS growth was achieved through an almost double-digit growth in food sales but offset by a decline in non-food sales and the net closure of three stores.

In Argentina revenue increased by 37.1%, driven by a 37.5% increase in SSS. This was significantly skewed by Argentina’s hyper inflationary economy.

…but declines in Peru and Brazil

Revenue in Peru decreased by 2.7% as a result of a 4.5% reduction in SSS.  It said the decline in SSS was due to higher promotional activity in the country and lower footfall, which it believes was lost to competitors’ opening new convenience stores. Cencosud opened one new store in Peru in 2019.

In Brazil revenue decreased by 0.8% due to a challenging macroeconomic environment, decelerating food inflation and increased promotional pressure. Cencosud operates two additional stores in Brazil YoY.

Organisational re-structure in Latin America

On 1 December 2019 the business appointed its new CEO, Matias Videla, formerly Cencosud’s Chief Financial Officer. On 21 November 2019 it also appointed country managers to each of the five countries it operates in. This is to promote efficiencies, speed up decision making and to leverage the managers’ local market knowledge.

Ecommerce showing good signs of growth

Ecommerce sales for Cencosud’s supermarket operations were 41% higher YoY. Its online sales now represent 1.9% of total supermarket sales, versus 1.2% in Q3 2018.

Cencosud’s latest omnichannel activity includes the launch of its new Jumbo App in Chile, featuring express delivery. Omnichannel sales have seen double-digit sales growth as a result of its launch.

The business also launched its Metro website in Colombia. This is currently limited to non-food sales at a national level but covers groceries in the capital city, Bogotá.

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