PARIS (Reuters) - Carrefour CARR.PA is ready to cope with tighter restrictions in France and elsewhere to curb the COVID-19 pandemic, Europe's biggest retailer said on Wednesday, as it posted its strongest quarterly underlying sales growth for at least two decades.
With food retailers across the world benefitting from a surge in demand as more consumers stay in to eat, the French group reported a robust third-quarter performance at home, as well is in other key markets Brazil and Spain.
Finance chief Matthieu Malige told analysts that meant profitability at Carrefour’s retail business should be better than expected this year, although the pandemic would hit other areas, such as financial services, travel and ticketing.
Overall, the market consensus for 2020 recurring operating profit was “fair”, Malige said, when asked to comment on a Factset consensus of 2.089 billion euros ($2.47 billion). That would be little changed from last year’s result.
LOOMING FRENCH LOCKDOWN
French President Emmanuel Macron is due to make a televised address on Wednesday evening amid reports the government has been exploring a new, national lockdown from midnight on Thursday, albeit a slightly more flexible one than the two-month shutdown that began in mid-March.
“We are preparing for the possibility of further restrictive measures being announced in the near future. We are fully ready for the different scenarios in all our countries,” Carrefour Chairman and CEO Alexandre Bompard said.
Best practices learnt during the previous lockdown included the launch of new dedicated services, such as for the elderly, as well as an increase in e-commerce capabilities and logistics.
Third-quarter group sales came to 19.69 billion euros ($23.27 billion).
Growth was 8.4% on a like-for-like basis - excluding fuel and calendar effects - against 6.3% in the second quarter.
That was Carrefour’s best quarterly performance in at least 20 years, and beat market expectations of 5.3% growth.
It reflected in particular a stronger performance in France where Bompard has made reviving flagging sales at hypermarkets a priority and where consumer satisfaction is improving.
During lockdowns, customers have favoured supermarkets close to home and convenience stores as well as e-commerce.
But since France ended its lockdown in mid-May, hypermarket sales have shown a marked improvement and this accelerated in the third quarter.
Sales at Carrefour’s French hypermarkets rose 2.5% in the quarter after a 3.6% decline in the second quarter.
In Brazil, Carrefour’s second-largest market after France, sales growth reached 26% from 14.9% in the second quarter, driven by Atacadao cash and carry stores and hypermarkets.
Carrefour said it was on track with a strategic overhaul aimed at boosting earnings and sales, and that it was sticking with all the targets under the plan.
It launched a five-year plan in 2018 to cut costs and boost e-commerce investment to improve profits and sales, as it seeks - like peers - to tackle competition from online rivals such as Amazon AMZN.O.
It is also expanding into convenience stores to reduce its reliance on hypermarkets, focusing more on organic products and private labels.
($1 = 0.8461 euros)
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Mark Potter
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