3Q16 RESULTS

French retailer Casino reported year-over-year revenue growth of 6.7%, to €10.4 billion, in the third quarter ended September 30, 2016. Organic revenue growth (excluding petrol and calendar effects) was 2.9% during the period, while comps were 1.7%. The overall growth was boosted by strong year-over-year sales growth of 20.8% in its Latin American food retail segment and 14.8% in its electronics segment. Revenues in France fell by 1.1% year over year and comps declined by 0.6%, while organic growth remained flat during the period. The company commented that sales were affected by the closure of loss-making stores at Leader Price and Franprix; the company plans to close a total of 282 stores out of a total 10,521 that it operates in the country. Closures impacted sales by -0.6%, and the transfer of some stores to franchisees under the Leader Price, Franprix and Convenience banners impacted France sales by -0.9%, during the quarter.  

PERFORMANCE BY SEGMENT

France Retail:

• Total sales declined by 1.1% to €4.8 billion. Organic sales growth was 0.0%, while comps fell by 1.5%.
• Sales at discounter Leader Price fell by 7.6% year over year, to €597 million, organic growth decreased by 4.6% and comps fell by 2.7%. The company said that this was due to the transfer of stores to franchises and the closure of 71 loss-making stores.
• Hypermarket Géant Casino posted a decline of 0.6% in sales, to €1.1 billion. Organic growth and comps stood at +0.3%. Sales of fresh products grew by 4.3% year over year, but total sales growth was offset by a decline in the sales of nonfood seasonal items.
• Sales under the Monoprix banner grew by 1.1% year over year, to €971 million, driven by the opening of 10 new stores during the quarter. Organic growth was 0.8% and comps fell 2.3% in this segment.
• Supermarchés Casino posted sales growth of 3.3% year over year, to €903 million. Organic growth was 4.5% and comps were +2.8%. Performance under this banner was boosted by the opening of a new concept store and the affiliation of seven new franchises.
• Franprix saw sales fall by 6.5% to €370 million, due to the transfers of stores to franchises and store closures. Organic growth declined 1.9% and comps fell by 0.1%.
• Convenience and other stores posted sales of €686 million, a decline of 1.7% year over year. Organic growth fell by 2.1% and comps fell by 3.9%.

 

Latin America Food Retail:

• Food retail sales in the region increased by 20.8% year over year, to €3.9 billion, partly due to favorable currency effects. Organic growth was 13.2% and comps grew by 8.2%.
• Exito (excluding Brazil) saw a strong performance in organic growth and comps.
• GPA Food sales in Brazil grew by 14.0% on an organic basis and comps grew by 8.3%. Assaí, which accounts for 37% of GPA Food’s sales, posted organic growth of 45.8%, driven by strong growth in traffic and store-expansion.

 

Latin America Electronics:

• Electronics retail sales in the region grew by 14.8% year over year, to €1.1 billion. Organic growth declined by 0.4% and comps grew by 2.0%.

 

E-Commerce Sales:

This includes all of Casino’s e-commerce operations, including fascias that may fall under the segments discussed above.

• Total online sales fell by 12.9% year over year and 16.4% organically, to €671 million.
• The company attributed this to a strong decline in the business of Cnova Brazil, which has been impacted by the economic slowdown in the country and poor performance in nonfood sales.
• Casino did note that the online sales through Cdiscount France increased by 5.6%, thanks to strategic moves to close specialized sites and reduce loss-making B2B sales.

 

OUTLOOK

The group confirmed its objectives for France for FY16, including that it expects to achieve trading profit of more than €500 million. Casino added that it expects free cash flow of more than €550 million and capital expenditure of about €350 million. Analysts forecast Casino’s FY16 revenues to be about €41.7 billion (a decline of 9.9% year over year), with trading profit of €1.2 billion (down 19.1% year over year), capital expenditure of €1.1 billion (down 25.1% year over year) and free cash flow of €510 million (down 46.1% year over year). Note: Casino completed the sale of Big C Thailand on March 21, 2016, and the sale of its Vietnam business on April 29, 2016. Considering these events, it has restated its operations in Asia, to exclude them for the periods presented in the interim statements. Since the restated numbers were unavailable, the year-over-year percentage changes have been calculated using the actual reported figures for FY15