Carrefour on course, but with a sputtering engine

French retailer Carrefour is well on track to achieve its ambitious objectives, despite uncertain market conditions. But in France and Belgium, the half-year figures are somewhat disappointing.

Difficult in Europe

With comparable store sales growth of 3.9 percent in the second quarter and an operating profit growth of 4.5 percent in the first six months of this year, Carrefour appears to be doing well. Turnover increased at group level by around 3.5 percent to 38.8 billion euros. A clear improvement in performance, according to CEO Alexandre Bompard, who emphasizes that the retailer is intensifying its transformation plan initiatives.
 

But not all numbers look rosy. While growth in Latin America was better than expected, the retailer was slowing down in European countries such as France, Spain, Italy and Belgium. On the French market, hypermarkets continue to struggle and non-food sales are falling sharply. Things are better with food sales, supermarkets and convenience stores. In Belgium, turnover fell by 3.1 percent in the first half of the year to EUR 2.015 billion. The comparable sales decrease was 1.6 percent in the second quarter (compared to 0.4 percent in the first quarter). The result of a weak market, strong competition and low inflation, the company says.

High ambitions

The group nevertheless maintains its high ambitions. The retailer invests in price competitiveness and in the development of services and online activities. The number of e-commerce collection points continues to rise, while the company is rapidly rolling out home delivery in various markets. Carrefour rationalises its assortments and updates its store formulas – especially the hypermarkets. In terms of expansion, the emphasis is on convenience concepts and innovative formulas, such as the Carrefour Bio stores or the restaurant concept Carrefour Bon Appétit.
 

More than ever, the Act for Food program becomes the reason for existence of the group. Sales of organic products increased by 25 percent in the second quarter. The Carrefour private brands now receive the nutri-score on the packaging, and the fight against food waste is stepped up. The Envergure purchasing alliances (with Système U) in France and with Tesco at the European level are bearing fruit. The cost reduction program already generated 1.4 billion euros, by 2020 this should be 2.6 billion. The retailer also continues to divest unprofitable and non-strategic components, such as the activities in China and the property portfolio of Cargo Property Assets.