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Carrefour Sees First Signs of Turnaround as Sales Top Estimates

October 11, 2012

Carrefour Third-Quarter Sales Climb, Helped by Latin America

Branded shopping carts sit ready for use at a Carrefour SA hypermarket in Drancy. Photographer: Balint Porneczi/Bloomberg

Carrefour SA (CA), the world’s second- largest retailer, gained the most in France’s benchmark CAC 40 Index after reporting sales that signaled new Chief Executive Officer Georges Plassat’s turnaround plan may be working.

The shares rose as much as 5.6 percent to 16.89 euros, the steepest intraday advance since Aug. 30.

A 2.1 percent gain in third-quarter revenue to 22.6 billion euros ($29 billion) “demonstrates that Carrefour’s performance is stabilizing in France and the action plan by new CEO Plassat is starting to bear fruits,” Nicolas Champ, an analyst at Barclays Plc, said in a note to clients today.

Plassat, who replaced Lars Olofsson as CEO in May, is seeking to combat weak consumer spending in France and other European countries. His plan includes giving more control to store managers and maintaining low prices on food to attract shoppers to the grocer’s largest stores, as well as eliminating jobs and exiting some countries to generate cash and cut debt.

Sales at the Boulogne-Billancourt, France-based retailer beat the 22.4 billion-euro average of seven analysts’ estimates compiled by Bloomberg. In France, Carrefour’s largest market, sales increased 1.2 percent, the company said.

“We believe Carrefour’s momentum will improve only gradually and it will take time to rebuild confidence with investors,” Champ said.

The shares were up 4.6 percent at 16.73 euros as of 10:41 a.m., paring this year’s decline to 5 percent.

Profit Guidance

Carrefour, which has lowered its outlook for profit five times in the past two years, is “comfortable” with analysts’ consensus for full-year earnings before interest and tax of 2.07 billion euros to 2.1 billion euros, Chief Financial Officer Pierre-Jean Sivignon said today.

Same-store sales in the third quarter rose 0.2 percent, excluding currency swings and gasoline. Revenue on that basis declined 1.5 percent in France and 3.3 percent in the rest of Europe. Sales on the same basis advanced 10 percent in Latin American and decreased 3.1 percent in Asia, Carrefour said.

“In all, a rather reassuring publication,” Arnaud Joly, an analyst at CA Cheuvreux, said in a note. “That said, we fear a quick deterioration in consumer spending in France and we believe that the consensus for 2013 is still overoptimistic.”

Sales from convenience stores and other formats in France rose 3.1 percent on a same-store basis, excluding gasoline. Sales deteriorated in the grocer’s French hypermarkets, falling 3.3 percent on the same basis, though the decline was a 2 percentage point improvement on the previous quarter, Carrefour said. Supermarket sales were unchanged.

Southern Europe

Same-store sales fell 5.4 percent in Spain and 6.6 percent in Italy, excluding currency swings and gasoline. Pressure on discretionary spending remained “intense” in Spain, while competitive pressure increased in Italy amid a significant drop in consumption, Carrefour said. Sales rose 2.1 percent in Belgium on the same basis, with all formats registering growth.

Latin America’s same-store sales growth, excluding currency swings and gasoline, was led by an 11 percent rise in countries excluding Brazil. Brazilian sales advanced 9.7 percent, with hypermarket revenue continuing to improve, Carrefour said.

Same-store sales fell 6.1 percent in China, excluding currency swings, and declined 3.1 percent in Asia.

To contact the reporter on this story: Andrew Roberts in Paris at

To contact the editor responsible for this story: Celeste Perri at

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