Note: Groupe Casino completed the sale of its Thailand and Vietnam businesses in 1H16, and began the process to sell Via Varejo and its subsidiary Nova Brazil in November 2016. Considering these events, Groupe Casino has restated its statements from 1Q15 to 4Q16, to exclude their impact. As consensus estimates are based on the previously reported and not restated numbers, we have not included them in our discussion below.

FY16 Sales

For the fiscal year ended December 31, 2016, Groupe Casino’s revenues increased 2.0% year over year to €36,030 million. Organic revenue growth (growth at constant scope of consolidation and exchange rates, excluding petrol and calendar effects) was 5.7% during the period, while comps grew 3.8%. The LatAm segment boosted the overall performance, with sales of €15,247 million, up 3.6% year over year (+11.4% organic growth) and comps grew 6.6%. The e-commerce segment also posted a strong 7.9% increase in sales to €1,843 million (+8.8% organic growth) and comps of 9.5%. The performance in France was softer, with sales growing 0.3% to €18,939 million (+0.8% organic growth) and comps up 0.3%.

4Q16 Sales

In the fourth quarter ended December 31, 2016, Casino’s total sales amounted to €10,039, an increase of 9.1% year over year and up 5.1% on an organic basis. Comps grew 4.2%.

4Q16 Performance by Segment

France Retail

• Total sales declined 0.5% to €4,915 million and organic sales fell 0.6%, while comps grew 0.2%. The company attributed the decline in organic sales to the transfer of stores to franchises and the simplification of the store network.
• Sales of hypermarket Géant Casino declined 0.4% year over year, but grew 0.6% on an organic basis. Comps grew 0.6%. Casino said that food sales continued to perform positively, with comps increasing 2.6% in the category.
• Discounter Leader Price saw sales fall 2.6% and 5.9% on an organic basis, impacted by the closure of 45 stores and transfers to franchises. Comps increased 0.1%.
• Monoprix posted sales growth of 2.4%, organic growth of 2.5% and comps up 0.4%. The positive performance was driven by robust food and apparel sales and the opening of 14 new stores during the quarter.
• Supermarchés Casino reported sales growth of 4.1%, organic growth of 5.2% and comps up 3.2%. The company said that increased average basket size and customer traffic, due to “fresh products, strong commercial momentum and improved customer service”, drove sales under this banner.
• Franprix saw sales fall 5.1%, organic growth decline 4.5% and comps fall 1.7%. Performance was impacted by the transfer of stores to franchises, the closure of stores and changes to the Mandarine concept of stores, which comprise 60% of the store base, under the banner, Casino said.
• Convenience-store sales fell 6.5%, down 6.9% on an organic basis, and a decline of 4.8% in comparable sales.

Latin America Retail

• Total sales jumped 22.5% to €4,539 million, while organic sales grew 12.3% and comps grew 7.5%, driven by strong performances in Brazil and Colombia, and favorable currency effects.
• Sales in Colombia, Uruguay and Argentina drove “robust sales growth in 4Q16” under the Exito banner, Casino said.
• Under the GPA subsegment, food sales grew 14.5% on an organic basis and comps grew 8.1%. Organic growth under the Assaí banner was 36.7% and comps grew 17.3%, due to high growth in traffic.
• Under the Multivarejo banner, sales grew 2.9% on an organic basis and comps grew 3.7%.

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

• Gross merchandise volume (GMV) amounted to €943.2 million including tax, up by 6.8% year over year.
• Comps grew 11.3%, adjusted for the sale or closure of specialized sites in 2016 and the planned reduction of B2B sales that was initiated in 3Q16.

Outlook

Groupe Casino estimates the unaudited FY16 trading profit in France to be in excess of €500 million, as was previously forecast by the company. For FY17, management stated that it expects costs to decline in France with the planned closure of loss-making stores and transfer to franchise partners. It also expects gross margin under some of the banners to increase due to improved assortments, a focus on fresh products and a revamp of private-label products. In Brazil, Casino expects costs to remain under control should the deceleration in inflation continue and if the central bank continues to hold interest rates down in FY17.