French retail giant Carrefour has suggested that efforts to improve the performance of its hypermarkets in France were paying off, despite sales falling in the second quarter of the year.
Like-for-like sales from Carrefour's French hypermarkets fell 5.7% in the three months to the end of June. The fall in sales from the stores accelerated from the first quarter, when sales dropped 3.7%.
However, Carrefour finance director Pierre-Jean Sivignon said the group is in "a better position" with its French hypermarkets, than last October when the performance of the stores was a key factor in a profit warning from the retailer.
"For the first time in food, on a like-for-like basis, [sales] turned out to be positive, and for quite a few quarters we had seen marginal, small negatives. We crossed the line on that in the second quarter," Sivignon told analysts on the firm's earnings call. "That is obviously quite important news for us."
However, he added: "We don't cry victory", adding that Carrefour will need to see whether the trend continued in coming quarters.
The retailer this morning booked an increase in first-half sales, driven by growth in emerging markets, notably in Latin America.
Growth in Latin America and Asia boosted sales by 0.9% to EUR43.68bn (US$53.40bn), but in Europe, sales were down 2.6% at EUR11.42bn, impacted by a "depressed" consumption environment in southern Europe. In France, sales dropped 0.7% to EUR19.01bn, supported by improving food sales but impacted by a fall in non-food sales.
Sivignon admitted the results "cannot be described as a satisfactory performance".
However, he added: "As we have already mentioned, the drop is largely attributable to our action plan. That involved implementing a new commercial mix that focuses more on low prices. This has a near-term impact on sales but should gradually lead to improved performance along with an improved price perception."
Carrefour did not provide a profit guidance for the full year, but Sivignon said he was "comfortable" with consensus forecasts of full-year EBIT of between EUR2.03bn and EUR2.1bn.
Conlumino analyst Simon Chinn said "ongoing uncertainty" in the eurozone continues to "downplay any chance of revival for the retailer's fortunes in the immediate term".
"Its future prospects are tightly tied to the outcome of the euro crisis," he said in a note. "Until there is any clear sign of a real solution to the eurozone's problems, Carrefour's sales will continue to suffer from a severe lack of demand from consumers, who lack the confidence and disposable income to spend in its stores."
Nevertheless, Carrefour's share price was up 7.77% at EUR14.23 at 13:14 GMT today. The company will report its first-half results on 30 August.
