UPDATE 2-Brazil lifts Casino's sales, French hypermarkets seen returning to growth

Tue Jan 14, 2014 3:04pm EST

* Q4 sales 13.1 bln eur vs Reuters poll avg 13 bln eur

* Q4 French Geant hypermarket sales down 2 pct vs 4.7 pct drop in Q3

* Brazil sales strong, Asia weaker on Thailand

* CFO sees French hypers back to positive l-f-l growth in H1 2014

By Dominique Vidalon

PARIS, Jan 14 (Reuters) - Casino said it expected sales at its French hypermarkets to return to growth in the next six months, continuing a trend that, with a robust performance in Brazil, caused its total revenue to rise faster in the fourth quarter.

The retailer's finance director, Antoine Giscard d'Estaing, said Casino hoped the Geant Casino hypermarkets - which have continued to reap the benefits of previous price cuts - would post positive like-for-like sales growth in the first half of 2014.

He told analysts he was confident that Casino would report a 2013 operating profit slightly above 2.35 billion euros ($3.2 billion), driven by international markets which make about 60 percent of turnover.

Casino, which controls Brazil's top retailer Grupo Pao de Acucar, said fourth-quarter group sales reached 13.1 billion euros, in line with the 13 billion forecast in a Thomson Reuters I/B/E/S poll of analysts.

Stripping out acquisitions, currency effects and excluding petrol, this was a like-for-like rise of 8.5 percent and an acceleration from 6.5 percent growth in the third quarter, Casino said on Tuesday.

Retailers across Europe have been struggling as shoppers' disposable income is squeezed by subdued wage growth and austerity measure. Most have responded with price cuts.

Casino has been expanding for some years in the fast-growing emerging markets of Thailand, Brazil, Vietnam and Colombia, away from weaker growth in Europe, although Asia has slowed recently.

In France, same-store sales excluding petrol and calendar effects at Casino's Geant hypermarkets fell 2 percent in the quarter, an improvement from a 4.7 percent decline in the third quarter and from a 7.9 percent drop in the second quarter.

Traffic at the Geant stores rose 1.9 percent in the quarter and food sales turned positive, up 0.6 percent. Although still negative, non-food sales at Geant also continued to improve.

In the last quarter of 2012, Casino funded permanent price cuts on basic products by reducing promotions, a move that initially cost it some customers. It typically takes several months before price cuts lead to stronger sales volumes.

"We expect probably positive like-for-like sales at Geant in the first half 2014," Giscard d'Estaing said.

Same-store sales at discount chain Leader Price fell 7.6 percent in the quarter, hit by price cuts that began in the quarter and have thus yet to boost traffic and revenue.

ASIA WEAKER

In emerging markets, Latin America posted like-for-like sales growth of 12 percent in the fourth quarter, but Asia declined 4.4 percent, as political unrest in Thailand and slower economic growth in the region weighed.

"It's fair to foresee some continued pressure on like-for-like sales growth going forward (in Thailand)," he said.

Casino shares are up around 1 percent this month, outperforming a 1.8 percent drop at Carrefour and a 0.4 percent firmer European retail sector.

Casino trades at 14.74 times 12-month forward earnings against 17.35 times for Carrefour and 10.84 times for Britain's Tesco.

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