Systeme U sees buoyant French food retail demand

Thu Jan 31, 2013 9:32am EST

* Eyes 2013 sales growth of 4.9 pct, market share 10.3 pct

* Company 'optimistic' about 2013 food retail sales

* January strong for food retail, non-food tougher

PARIS, Jan 31 (Reuters) - France's fourth-largest food retailer Systeme U said on Thursday it would target a further increase to its domestic market share this year, hoping to tap into a steady retail sales market via low prices, despite a challenging economic climate.

Demand for food products at the group's stores stayed robust in January and helped overall sales to rise 5 percent in an encouraging sign for the company's full-year performance, chief executive Serge Papin told a news conference.

Non-food items such as electronics are tougher, but clothing is doing well, Papin said, echoing similar comments by rival Carrefour earlier this month.

"I am quite confident for 2013," he added.

The company is aiming to increase market share to 10.3 percent from the 10 percent recorded last year, which compares with Carrefour's 20.6 percent and 18.6 percent and 14 percent respectively for Leclerc and Intermarche, its unlisted rivals.

Food sales in France particular are being boosted as cash-strapped French consumers cut down on restaurant outings to stay home and cook. That in turn is supporting broader retail sales figures.

"Our focus is permanently low prices," Papin said, adding the group was cutting down on promotions in order to fund price cuts.

Systeme U is predicting growth of 4.9 percent this year to around 19 billion euros. It posted an 11 percent increase in 2012 revenue to 17.84 billion euros, which includes fuel sales.

2012 sales were also lifted by the acquisition of 46 Coop Atlantique stores.

Excluding fuel and the effect of store disposals and additions, Systeme U sales grew 3.5 percent in 2012, outperforming declines of 1.5 percent for Carrefour and 0.8 percent for Casino. Leclerc sales grew 7 percent.

Systeme U has currently 1,504 stores, including 841 Hyper U or Super U discount stores and 663 convenience neighborhood stores known as Marche U, U Express and Utile.

(Reporting by Dominique Vidalon; Editing by Sophie Walker)