KEY POINTS

  • Carrefour grew first-quarter sales by just 0.4% on a comparable basis. Total sales fell by 2.4% at current exchange rates.
  • French comp growth slumped from 1.5% in the prior quarter to a decline of 0.1% in 1Q18.
  • Analysts have penciled in total group sales growth of just 0.3% for FY18.

1Q18 Update

Carrefour grew comparable sales excluding fuel and calendar effects by just 0.4% in 1Q18, compared with 1.9% growth in the final quarter of 2017.

At constant exchange rates, total sales were up 2.6% in 1Q18. The depreciation of the Brazilian real impacted total sales as reported, which were down 2.4%.

  • In France, which accounts for almost half of revenues, Carrefour posted a comp decline of 0.1% and total sales growth of 0.9%. In the prior quarter, French comps had grown by a solid 1.5%.
  • At constant exchange rates, comparable sales were down 0.8% in the Rest of Europe, up 4.5% in Latin America and down 3.9% in Asia. Growth in each of these regions slowed relative to the prior quarter.

Management pointed to adverse weather negatively impacting nonfood ranges and hypermarket formats in Europe. Brazil continued to see sharp food-price deflation. The company also noted sustained strong competitive pressures across its main markets.

Carrefour 2022

The company pointed to progress in its Carrefour 2022 turnaround plan:

  • It has begun the process of transforming the organization in France, Belgium and Argentina, and discussions regarding the sale or closure of 273 ex-DIA stores have progressed.
  • Carrefour has rapidly expanded grocery home delivery in France and launched its Carrefour Pay payment service. It also acquired a majority stake in meal-kit firm Quitoque.
  • It has adopted blockchain technology for traceability in one product category.

Outlook

The company issued no guidance for FY18 other than noting a capital expenditure target of €2 billion and an expectation that depreciation charges will increase. For FY18, analysts expect the company to grow revenues by 0.3%, to €79.1 billion, and for EBIT to fall by 3.8%. The consensus estimate calls for unadjusted net income of €623 million in FY18 versus a net loss of €531 million in FY17.


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