1Q19 Update Carrefour reported 1Q19 group comparable sales of 2.7%, strengthening from 1.9% in the prior quarter and comfortably ahead of the consensus estimate of 1.7% recorded by StreetAccount. This was supported by a sequential improvement in French comparable sales as the company cut prices. Group sales of €20.02 billion were down 3.0% in total, impacted by currency effects, and were broadly in line with the consensus estimate of €20.05 billion.

• In France, Carrefour grew comparable sales 1.0% versus (0.1)% in the prior quarter and the 0.1% consensus recorded by StreetAccount. In France, comps grew 2.0% in 1Q19 in the food category, while nonfood comparable sales were down 5.4%.
• In Europe ex France, comps were down 1.5%, versus a decline of 1.7% in the prior quarter and in line with expectations. Comparable sales were down 2.8% in Spain, down 3.8% in Italy and down 0.4% in Belgium. A transformation plan, unveiled in February 2019, is underway in Italy.
• Latin America comparable sales were up 14.5%, accelerating from 12.9% in the prior quarter and ahead of the 12.5% consensus. Brazil comparable sales were up 6.6% versus 6.2% in 4Q18.
• Asia comps were down 3.4%, compared to a 4.1% decline in the prior quarter and in line with consensus. China comps came in at (4.4)%, improving from (6.2)% in 4Q18.

Management pointed to “numerous initiatives” to strengthen Carrefour’s competitiveness across markets, including permanent price reductions across all formats and channels in France, which was hailed as “a first for Carrefour.” In Italy, Carrefour launched price reductions on 5,000 products in mid-April. In February, Carrefour announced that, worldwide, it would adapt hypermarkets to the demands of each area, and management noted that the group is continuing to reduce unproductive sales areas, mainly in nonfood categories, which includes switching some space to Drive (pickup points), outlets and shopping malls. Carrefour grew food e-commerce more than 30% in 1Q19. It is opening new stores in growth formats, such as convenience stores. It is pursuing cost reductions in all countries, including through purchasing alliances, in operating processes and purchasing goods not for resale. Outlook Management reaffirmed the financial targets of its Carrefour 2022 plan, including achieving €2.8 billion in cost reductions by 2020, €5 billion in food e-commerce sales in 2022, €5 billion in sales of organic product in 2022, and disposal of nonstrategic real estate assets for €500 million by 2020. The company did not provide quantitative guidance for FY19. For the current fiscal year, analysts expect Carrefour to grow total revenues 1.7% and EBIT 8.1%, yielding an EBIT margin of 2.7%. Analysts have penciled in a 15.3% increase in adjusted net income for FY19, according to S&P Capital IQ.