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Carrefour Q2 sales accelerate, Italy back to growth

Jul 17, 2014

PARIS, France - Carrefour, Europe's largest retailer, said on Thursday sales growth accelerated in the second quarter, reflecting improving trends in austerity-hit Southern Europe and notably Italy.

Elsewhere in Europe, sales rose in Spain for the third consecutive quarter, while revenue at French hypermarkets grew for a fifth quarter.

Growth in Brazil, Carrefour's largest market after France, also accelerated, though trading conditions remained weak in China.

Chief Financial Officer Pierre-Jean Sivignon told a conference call the consensus of analysts' forecasts for an operating profit of around 2.28 billion euros this year was "reasonable".

This would be a 6.3 percent rise on 2013.

The world's largest retailer after Wal-Mart said second-quarter sales were 20.517 billion euros ($27.75 billion) versus an average forecast of 20.384 billion in a Reuters poll of analysts.

Stripping out fuel and currencies, revenue grew 4.9 percent versus 3.7 percent growth in the first quarter.

"This is the best growth rate achieved by the group in five years," Sivignon said.

Carrefour is battling to reverse years of underperformance in Europe, where it earns 73 percent of its sales, with problems partly due to a reliance on the hypermarket format it pioneered now that customers' habits have changed to favour more local and online shopping.

Chief Executive Georges Plassat has responded with cutting costs, revamping stores, improving price competitiveness, simplifying product offerings and giving more autonomy to store managers, starting in France.

Sales rose 0.1 percent in Spain while Italy achieved like-for-like sales growth of 2.9 percent in its first positive performance in five years, thanks notably to a promotional campaign linked to the World Cup.

"This is a encouraging," Sivignon said, cautioning the positive trend needed to be confirmed in the coming months.

In France sales grew in all store formats with same-store sales at hypermarkets up 0.4 percent after a 0.7 percent increase in the first quarter.

The group said French hypermarkets food sales continued to grow while non-food sales were nearly flat.

Many retailers across Europe have been struggling as shoppers' disposable income is squeezed by subdued wage growth and austerity measures, and most have responded with price cuts.

Smaller French peer Casino on Tuesday posted an improvement in its hypermarket sales helped by price cuts.

Carrefour's shares closed up 1.88 percent at 27.59 euros on Wednesday. The stock has lost 4.2 percent this year to lag a Stoxx Europe 600 retail sector index down 2.9 percent.

$1 = 0.7395 Euros


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