DIpil Das
3Q19 Update
Carrefour reported the following for 3Q19:
- Group comparable sales were up 2.3%, versus the 2.0% consensus estimate recorded by StreetAccount and a 3.9% rise in the prior quarter. 3Q19 revenues of €20.2 billion were in line with analyst expectations.
- French comparable sales fell 0.9%, below the +0.4% consensus estimate and compared to 0.7% in the second quarter. In France:
- Hypermarket comparable sales fell a hefty 3.6%, versus consensus of a 2.0% decline and following a 1.1% fall last quarter. Management pointed to factors impacting hypermarket performance such as the move away from promotions and toward EDLP, as well as demanding comparatives from the year-ago period.
- Supermarket comp sales were up 1.5%, versus consensus of 1.2% and a 2.5% rise last quarter.
- Proximity and other formats saw comparable sales rise 2.2%.
- Europe ex-France comparable sales were up 0.4%, versus consensus of flat and compared to flat sales in the prior quarter. Comp sales were up 1.5% in Spain (above consensus), down 2.3% in Italy (above consensus) and down 2.8% in Belgium (below consensus).
- In a weak quarter, Latin America rescued the top line with 12.8% comparable sales growth, ahead of the 11.8% consensus estimate and compared to 15.9% in the prior quarter.
- The company grew organic product sales by more than 25%. Carrefour aims to reach €5 billion in organic food sales by 2022.
- Carrefour undertook various initiatives to improve price perception, including a repositioning away from promotions and toward EDLP in France, and a campaign for everyday low prices in Italy. As part of the Carrefour 2022 plan, the company aims to invest around €2 billion annually to improve price competitiveness and productivity.
- By the end of September, the company had eliminated around 110,000 square meters (1.18 million square feet) of “under-productive” hypermarket sales area, which included a reduction of 10,000 square meters (107,600 square feet) in 3Q19.
- In e-commerce, Carrefour opened its 1,000th Drive pick-up point in France and launched express delivery services in four countries in 3Q19. In October, its Brazilian arm announced the acquisition of a 49% stake in Ewally, a Brazilian fintech company, enabling expanded payment solutions and digital services. Carrefour is targeting a €2.8 billion investment in its omnichannel proposition by 2022 and seeks to achieve €5 billion in turnover in food e-commerce.
- The company opened 134 new convenience stores in 3Q19, opened the first two Supeco discount stores in France and launched a new “clean-beauty” concept store in France.
- Reducing costs by €2.6 billion on an annual basis by 2020.
- Generating €4.2 billion in food e-commerce sales in 2022.
- Generating €4.8 billion in sales of organic products in 2022.
- Eliminating 350,000 square meters (3.77 million square feet) of hypermarket sales area worldwide by 2022.
- Cutting product assortment 15% by 2020.
- Securing one-third of sales from Carrefour-branded products in 2022.
- Opening 2,700 convenience store by 2022.