PARIS (Reuters) - Carrefour (CARR.PA), Europe’s largest retailer, said that its overhaul plan aimed at boosting earnings was on track even though sales growth slowed in the third quarter, reflecting a weaker performance in its core French market.
In Brazil, the group’s second-largest market after France, sales growth also slowed amid decelerating food inflation but in Europe, Spain returned to growth in the quarter.
Carrefour is in the midst of a five-year plan to cut costs, boost E-commerce investment, offer more organic products and own-brand labels to tackle competition from the likes of domestic rival Leclerc and online giant Amazon (AMZN.O).
“We are pursuing our efforts to build sustainable and profitable growth. This solid quarter confirms our transformation momentum and reinforces confidence in the strategy that is being implemented,” Finance Chief Matthieu Malige said in a call with journalists.
Third-quarter sales came to 20.2 billion euros ($22.50 billion). Growth reached 2.3 percent on a like-for-like basis - excluding fuel and calendar effects - against 3.9% in the second quarter.
The third-quarter performance reflected a weak performance in France where CEO Alexandre Bompard has made reviving flagging sales at large hypermarkets a priority.
The group said on Tuesday that sales at its French hypermarkets were down 3.6% in the third quarter following a 1.1% decline in the second quarter, offsetting growth at supermarkets and convenience stores.
Carrefour’s turnaround plan includes fewer sales promotions in France to focus on every day low prices and scaling back of non-food items. The plan weighed on hypermarket sales in the quarter, Malige said.
In Brazil, Carrefour’s second-largest market after France, sales growth also slowed to 3.8% percent from 7.7% in the second quarter. The Atacadao cash-and-carry stores put in a strong performance but decelerating food inflation weighed.
Carrefour said that it was sticking to the financial targets laid out in its ‘Carrefour 2022’ plan.
Carrefour shares have gained 3 percent so far this year, underperforming their sector in Europe .SXRP. Carrefour’s shares are still down 29 percent since Bompard joined in July 2017.
Reporting by Dominique Vidalon; Editing by Christian Lowe