July 12, 2012 / 6:51 AM / 7 years ago

UPDATE 1-Spanish woes hit Carrefour sales, gives no guidance

* Q2 like-for-like sales fall 1.3 pct to 21.72 bln eur

* Reuters poll avg for Q2 sales was 21.65 bln eur

* Company gives no guidance (Adds detail, background)

By Dominique Vidalon

PARIS, July 12 (Reuters) - Europe’s biggest retailer, Carrefour, said second-quarter like-for-like sales dropped 1.3 percent, dragged down by falling demand in austerity-hit Italy and Spain and sluggish French hypermarket revenue.

The sales report highlights the size of the challenge facing new Chief Executive Georges Plassat, who took over in May with a brief to reverse years of underperformance in Europe.

Plassat has so far avoided giving any guidance on profits as he considers his options to turn around Carrefour, and the group gave no steer in its statement on Thursday.

The world’s largest retailer after Wal-Mart posted second-quarter sales of 21.72 billion euros ($26.6 billion), slightly above the average of analyst estimates of 21.65 billion.

Stripping out fuel and currencies, quarterly sales fell 1.3 percent, with revenue at core French hypermarkets down 5.7 percent.

Retailers across much of Europe are struggling as shoppers’ disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, while confidence is sapped by the ongoing euro zone debt crisis.

The CEO of German rival Metro warned last week that the crisis was hurting demand in Europe’s biggest economy.

After a recent warning from food giant Danone highlighted trouble in Spain, many analysts had been anticipating that Carrefour, which is heavily exposed there too, would have to guide on profits, leaving Plassat free to focus on his turnaround plan for the group when he presents first-half results in late August.

Carrefour remains exposed to some of the countries worst hit in the euro zone crisis, like Spain and Italy, having pulled out of Greece last month.

Quarterly like-for-like sales excluding petrol fell 7.4 percent in Spain and 4.3 percent in Italy.

Carrefour cited “increased pressure on consumption and discretionary spending” in Southern Europe though it said non-food sales in Italian hypermarkets were recovering.

In emerging markets, China continued to struggle, while Brazil, now Carrefour’s second-largest market after France, put in a strong performance.

Carrefour has tied the slump in French hypermarket sales to a tough economic climate, which hit non-food sales, and to the effects on sales of its ‘Reset’ plan, which entails fewer one-off promotions and more consistently lower prices.

Carrefour shares have lost 25 percent this year, sharply underperforming a 0.25 percent decline in the European retail sector. ($1 = 0.8164 euros) (Editing by James Regan)

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