Auchan has released first half results which it says show a ‘significant improvement in profitability’, which has been helped by the implementation of its Renaissance initiative. The retailer reported that while total sales fell by 1.8%, group EBITDA increased by 14.9%, with its EBITDA margin reaching 5.6%.
Revenue growth seen in most markets
Auchan reported revenue fell by 1.8%, at current exchange rates, to €22.3 bn, while they rose 0.8% on a like-for-like basis, excluding fuel. The company said the growth had come ‘against a particularly volatile backdrop in the countries [it operates]’.
In France, like-for-like sales rose 0.8%, with the fall in hypermarket sales being offset by growth across all other formats, especially digital, where they rose 33%. In Southern Europe, like-for-like sales increased by 4.9%, due to ‘continued momentum in Portugal and Spain’. In Central and Eastern Europe, like-for-like sales fell by 3.9%, affected, once more, by Russia. In Russia it said its ‘business [had] suffered from the particularly drastic measures implemented to limit travel’. The contraction had been partially offset by double-digit growth in Hungary and a rise in revenue in Poland and Ukraine.
In Asia, like-for-like sales rose by 2.3%, with China seeing a benefit from its phygital strategy, while in Taiwan Auchan said revenue ‘saw substantial growth’. In its final market, Senegal, H1 revenue fell by 6% in like-for-like terms.
Lockdowns boost sales, but led to channel shifts…
Auchan said it had enjoyed ‘sustained first-quarter growth [due to] confinement measures linked to the health crisis’. It said that while lockdown measures had led to a ‘significant fall’ in hypermarket traffic, which had been ‘partially offset by an increase in the average basket’, it had benefited from ‘substantial growth in food e-commerce and convenience store sales’.
…Boosting digital sales considerably
Auchan said in April, excluding China, its digital revenues rose 85%, which helped to underpin ‘each country’s phygital strategy’. It noted the pace of growth, which was 33% in total across all its operations, was ‘regardless of [the country’s] digital maturity' and meant that digital sales reached 12% of its total revenue at the end of the first half. Auchan said ‘digital revenue peaked in April in all countries’. By market it said revenue had quintupled in Spain, tripled in Portugal and Ukraine, ‘more than doubled’ in Hungary and Poland, while in France growth ‘was over 70%’.
Renaissance initiative underpinning improvement in results…
Auchan said at the end of H1 2020 its country operations had identified 152 projects ‘to enhance operational excellence’ in key areas. It said it had continued to implement these projects ‘despite the difficult context’. These steps saw it make ‘substantial savings’ in Poland, Taiwan and Spain.
…And helping confirm it has the correct areas of focus
Auchan noted the positive results and growth underlined its belief in its existing strategy; to be ‘a leading player for good, healthy and local products through the selection and design of a unique, fair and responsible product offering’. To this end it had worked with national producers ‘to develop its responsible agricultural channel’, highlighting its operations in France, Spain, Portugal, Russia, and Ukraine. It had also ‘continued to work on its exclusive products, with an increase in locally produced private label products (in France, Spain, Ukraine, Russia and Poland), its own organic brand, and its international ranges. Finally, it rolled out Nutriscore label further in Spain and Portugal.