Bloomberg News

Carrefour Stock Rises on Higher 2nd-Quarter Sales (Update1)

July 13, 2006

Shares of Carrefour SA (CA), Europe's largest retailer, advanced after the company said second-quarter sales climbed 9.1 percent, helped by price cuts and new stores in Asia and Latin America.

Revenue climbed to 21.4 billion euros ($27.1 billion), the Paris-based company said yesterday after French stock trading ended. Analysts surveyed by Bloomberg expected 21.3 billion euros. In Carrefour's domestic market, sales rose 7.2 percent to 10.4 billion euros at superstores open at least a year.

Chief Executive Officer Jose Luis Duran, who took over in February 2005, has added more outlets in China and Malaysia and plans to open 1,000 stores in total this year. At the same time, Carrefour, the world's second-biggest retailer, is withdrawing from underperforming markets such as Mexico and cutting prices in France to compete with Casino Guichard-Perrachon SA.

``Sales were slightly better at both group level and at the all-important French hypermarkets,'' Andrew Kasoulis, an analyst at Credit Suisse in London, said today in a note to clients. ``It all seems to prove that Carrefour's commercial strategy is gaining traction.''

The shares rose 76 cents, or 1.6 percent, to 47.51 euros in Paris. They have gained 22 percent in the past year, the biggest climb in the nine-member Bloomberg Europe Food Retailers Index, which has added 10 percent. The company has a market value of about 33.5 billion euros.

More Selling Space

Revenue in Latin America increased 24 percent, while sales in Asia jumped 16 percent, Carrefour said. Sales in Europe excluding France rose 7.9 percent.

Carrefour stuck to a goal of improving sales growth this year compared with 2005 and said it's still aiming to add around 1.5 million square meters of selling space in 2006. The company opened 232 stores in the second quarter, including 10 in Latin America and 22 in Asia. As of June, it had 12,185 outlets worldwide, according to the statement.

Wal-Mart Stores Inc., based in Bentonville, Arkansas, is the world's biggest retailer by sales.

Carrefour, like other French retailers, has suffered in recent years as higher fuel costs and concern about a jobless rate twice as high as those of the U.S. and the U.K. prompted consumers to trim spending and switch to discount stores. With unemployment falling and the government encouraging consumers to borrow, though, demand may improve, analysts have said.

To contact the reporter on this story: Angharad Couch in London at acouch2@bloomberg.net.

To contact the editor responsible for this story: Kimberly Kirner at kkirner@bloomberg.net


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