KEY POINTS

  • Groupe Casino reported steady growth in French comparable sales, which rose by 1.9% year over year in 3Q18.
  • General merchandise website Cdiscount saw revenues fall but gross merchandise volume increase, due to a higher proportion of third-party sales. Comp growth in Latin America accelerated.
  • In France, Monoprix recently started selling via Amazon Prime Now and management reported that the number of orders placed through Prime Now had exceeded its projections.

3Q18 Trading Update

Groupe Casino reported that group comparable sales excluding automotive fuel were up 3.3% year over year in 3Q18, broadly level with the 3.2% rate reported for 2Q18 and just shy of the 3.5% consensus estimate recorded by S&P Capital IQ.

Total group sales were down 2.4% year over year.

By region and segment, Groupe Casino reported the following comparable sales performances at constant exchange rates:

  • France comparable sales excluding Cdiscount were up 1.9%, after rising by 1.8% in 2Q18. Major rival Carrefour had reported a strengthening of its French comparable sales, to 1.6%, the day before Groupe Casino reported results.
  • In France, comp growth was 1.4% at Monoprix, 2.7% at Franprix and 1.8% at hypermarkets, which included 2.8% growth at Géant hypermarkets. Comp growth came in at 1.7% for the group’s supermarkets, which included 1.5% growth at Casino supermarkets. Leader Price grew comps by 1.9% and convenience and other formats grew comps by 3.5%.
  • Cdiscount’s comparable sales fell by 3.1%, versus a 5.1% increase in the prior quarter. The company said that Cdiscount’s gross merchandise volume rose by 9.3% on an organic basis in 3Q18. The contrast in numbers was due to very strong growth in marketplace (third-party) sales, on which Groupe Casino books only a commission.
  • Comp growth in Latin America came in at 5.5%, accelerating from 4.4% in 2Q18. This echoed the strong Latin America trend reported by Carrefour this week.

Management pointed to “very robust” traffic at Franprix stores, “excellent momentum” in food at Géant hypermarkets and an improvement in average basket size at Leader Price. Monoprix has been offering its products through Amazon Prime Now since September 12 through a partnership with Amazon, and management said that the number of orders placed through Prime Now had exceeded its projections.

In discussing Latin America, management noted organic growth of 12.6% at GPA Food and a sequential improvement in comparable sales growth at Éxito Group excluding GPA Food.

Outlook

Groupe Casino confirmed its full-year guidance, which includes the following:

  • In FY18, the company expects organic growth in group trading profit to be in excess of 10%. In France, it intends to achieve over 10% organic growth in trading profit in the food business.
  • In France, the company expects to report free cash flow from operations excluding exceptional items to cover financial expenses and dividends and enable it to improve net financial debt.
  • Management expects to see a net debt reduction of around €1 billion in France by December 31, 2018, thanks to self-financing and proceeds from asset disposals announced in June. It also anticipates a reduction in group net debt.

For FY18, analysts expect Groupe Casino’s revenues to fall by 2.2%, to €37.0 billion, and for the company’s EBIT to slide by 4.4%, yielding an EBIT margin of 3.2%. According to S&P Capital IQ, consensus calls for the company to report a 17.2% fall in adjusted net income for FY18.


Leave a Comment