1Q18 Sales

French retailer Groupe Casino reported a net sales decline of 3.8% to €8.90 billion in the first quarter ended March 31, slightly below the consensus estimate of €8.91 billion, as recorded by S&P Capital IQ. Foreign-exchange effects of (7.7)% severely impacted reporting figures, particularly in Latin America where net sales declined by 10.1%. Sales in France, including Cdiscount, increased by 1.7%. Stripping out exchange rate, fuel and calendar effects, organic sales growth for the group was 3.1% and comparable sales growth was 1.8%.

1Q18 Sales by Segment

France Retail

• Comparable sales growth and total sales growth, including Cdiscount, was 1.7%.
• Comps excluding Cdiscount grew by 1.3%, of which 2.2% growth was from food sales, marking an acceleration from 4Q17’s 0.3%.
• Cdiscount’s total sales growth was 4.5% and comparable sales growth was 4.7%.
• Comps for Groupe Casino’s largest banner Monoprix expanded by 1.2%, denoting a significant improvement from the 0.5% decline recorded in 4Q17 and driven by continued progression in food sales.
• Franprix’s comps increased by 1.0%, a sequential improvement from 0.5% in 4Q17.
• Hypermarket comps grew by 1.6% after flat performance in the last quarter.
• Casino supermarkets’ comps improved by 1.3%.
• Discounter Leader Price’s comps were up by 0.9%, a consecutive improvement from the previous quarter’s 0.3%.
• Comps under convenience and other stores rose by 0.7%, indicating a slowdown from last quarter’s 2.3% growth.

Latin America

• Comparable sales growth was 1.9%, marking a continual deceleration from 4Q17’s 2.4% and 3Q17’s 2.0%, due to slowing food inflation.
• GPA Food posted comps growth of 2.2% despite food deflation, driven by a 7.4% increase in sales volume.

Outlook

Groupe Casino did not provide guidance for the year in the latest release. At its FY17 results announcement, the company said that it expects organic growth in excess of 10% in FY18 group trading profit. In France, it intends to achieve over 10% organic growth in trading profit in the food business. The company hopes to reduce group net debt and realize “significant potential effects from the sale of Via Varejo,” during the year. It anticipates free cash flow from continuing operations excluding exceptional items to be above €1 billion and capex of around €1 billion. For FY18, analysts expect Groupe Casino to grow revenues by 1.5% and adjusted EPS by 1.0%. Analysts expect EBITDA to contract by 0.8%.