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Stronger growth in France helps grocery chain Carrefour’s Q3 sales

October 20, 2016 04:18 PM
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(Bloomberg)—Supermarket chain Carrefour SA, France’s largest retailer, reported third-quarter revenue that beat analysts’ estimates on stronger-than-expected growth in its home country.

Sales rose 3.2% on a like-for-like basis to 21.8 billion euros ($23.9 billion), Boulogne-Billancourt, France-based Carrefour said Wednesday. Analysts expected 21.7 billion euros. In France, sales climbed 1.2%, beating the estimate for 0.5% growth. Carrefour is No. 16 in the Internet Retailer 2016 Europe 500 with an estimated $2.08 billion in 2015 web sales, according to Top500Guide.com data.

“This was a good third quarter, with comparable sales showing strong growth,” chief financial officer Pierre-Jean Sivignon said on a conference call. “This third quarter confirms our good start to the year.” Analysts’ forecast for a 2.45 billion-euro full-year profit remains attainable, Sivignon said.

CEO Georges Plassat is pushing a plan to modernize stores and add collection points for online orders in France amid tough competition in the company’s home market. The company has also been suffering from deteriorating economic conditions in other European markets and Brazil.

"This is a good set of results for Carrefour," London-based Sanford C. Bernstein analysts Bruno Monteyne and Thomas Wharram wrote in a note. "French like-for-like supermarket and convenience sales were especially strong and hypermarkets improving."

Carrefour stock this year has declined 11%, compared with a 9.6% decline in the Stoxx 600 Retail Index.

Carrefour is on track to finish store transformations by the end of the year, Sivignon told analysts during a conference call. There are encouraging signs in Chinese food sales while the company is adopting a more aggressive approach in France in terms of prices, he said.

While the improvement in French hypermarkets is positive, the quarterly number alone isn’t enough to persuade some investors that the company can return to sustainable growth without margin investment, Robert Joyce, an analyst at Goldman Sachs, said in a report.

 

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