July 17, 2014 10:01 am

Carrefour sales rise despite China dip

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Customers push shopping carts as they browse for produce inside a Carrefour SA supermarket in Portet sur Garonne, near Toulouse, France, on Tuesday, March 5, 2013. Carrefour's stock has risen 47 percent since Georges Plassat's arrival as chief executive officer, partially offsetting a 71 percent decline in the preceding five years. Photographer: Balint Porneczi/Bloomberg©Bloomberg

Carrefour, the world’s second-largest retailer by revenues, reported a near 5 per cent rise in sales for the second quarter, despite a reverse in China and significant negative currency movements in Latin America.

Organic group revenues climbed 4.9 per cent worldwide compared with the same period last year at €20.5bn, overcoming a negative 4.9 per cent hit from currency fluctuations and cheaper petrol prices, the French group said on Thursday.

Pierre-Jean Sivignon, chief financial officer, said consensus market forecasts of €2.38bn operating profit for 2014 “remained reasonable”. Carrefour will report full results for the first half on July 31.

The group, under chief executive Georges Plassat, is two years into a back-to-basics strategy, stepping up investment to revamp stores in its core French market and selling operations in non-core emerging markets.

Like-for-like sales in France were up 2.1 per cent to €9.8bn in the second quarter, despite the country’s sluggish economy. Sales growth was strongest at its supermarket and convenience stores, but Carrefour reported marginal growth at its struggling hypermarkets. Overall like-for-like sales in Europe rose 1.9 per cent to €15.2bn.

But Carrefour reported more difficult conditions in Asia, especially China, where it continues to drive expansion. Asian sales, at €1.5bn, were down 6.1 per cent on a like-for-like basis.

Carrefour noted “an unchanged consumption environment” in China, where like-for-like sales fell 7.2 per cent. Mr Sivignon said there had been a slowdown in discretionary spending in China since the end of last year, adding that “the weather didn’t help either”. But he said Carrefour remained committed to its growth strategy in the country.

By contrast, overall emerging markets performance showed double-digit growth, up 12.1 per cent at €5.3bn, driven by a 15.2 per cent surge in like-for-like revenues in Latin America.

The big performers were Brazil and Argentina, despite a negative 23 per cent hit from the weak Brazilian real and Argentine peso. Like-for-like sales in Argentina leapt 42.4 per cent.

Mr Sivignon said 7.2 per cent like-for-like sales growth in Brazil was achieved despite a mixed impact from the World Cup at the end of the quarter. The tournament drove sales of items such as meat and televisions, he said, but this was offset by the holidays taken on the days the Brazil team played games.

This month, Carrefour announced it was pulling out of India, where it has five wholesale cash-and-carry outlets but, like other retailers, has been prevented by local regulations from developing a retail network.

Shares in Carrefour were 1.1 per cent higher in early Paris trading at €27.91.

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