February 19, 2018 / 7:41 AM / a year ago

UPDATE 2-Casino bets on Sarenza shoes to keep online rivals at heel

* Sarenza had sales of more than 250 mln euros

* Casino looking to build up online presence

* French sector faces challenge from Amazon (Adds share price, fund manager comment)

By Sudip Kar-Gupta

PARIS, Feb 19 (Reuters) - Casino plans to buy shoe retailer Sarenza as the French group develops its Monoprix supermarket chain online to better compete with firms like Amazon.

Casino, whose credit rating was cut to junk by Standard & Poor’s in March 2016, is under pressure to revive profits in France, its biggest market, where it now makes more than 50 percent of its sales, at a time of slower growth in Brazil.

The planned takeover of Sarenza, which had sales of more than 250 million euros ($310 million) in its last fiscal year, follows an e-commerce deal between Casino and Ocado.

Shares in Casino rose 1.3 percent, outperforming a weaker overall Paris market on Monday as investors welcomed the news of the planned Sarenza deal, although the stock remains down by around 9 percent since the start of 2018.

The company’s shares had fallen sharply in January after it reported weak fourth-quarter sales.

“Casino’s plans to strengthen its digital presence are a sound strategy, although we will have to see how the company integrates it all,” said Meriem Mokdad, fund manager at Paris-based Roche Brune Asset Management.

Mokdad said her firm did not own Casino shares as it wants more evidence of a turnaround at Casino before investing.

Earlier this month, Amazon announced plans to create 2,000 new jobs in France, a further sign of the U.S. online giant’s ambitions to grow there.

France’s traditional supermarket operators such as Casino, sector leader Carrefour and privately-held firm Leclerc have all taken steps to respond to the Amazon threat.

Leclerc announced the launch of a food delivery service in Paris last month, while Carrefour struck a partnership in China with Tencent and said it would boost its investments in the sector. ($1 = 0.8057 euros) (Reporting by Sudip Kar-Gupta; Editing by Gopakumar Warrier/Louise Heavens/Alexander Smith)

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