French hypermarket group Auchan has seen its profits drop by half in 2021. The coronavirus pandemic was particularly damaging to the French home market. The next challenge is already looming: Auchan also has stores in both Russia and Ukraine.
Absent border shoppers
For French food retail, 2021 has not been a high-flyer: following Casino earlier today, Auchan also has to acknowledge that it has been a challenging year. The turnover of Auchan Retail, the holding company’s retail branch, fell by 1 % to 30.5 billion euros. On the French home market, the decline was even 2.6 %, to 16.2 billion euros.
CEO Yves Claude speaks of a “resolutely positive dynamic in nine of the ten countries”, French newspaper Le Figaro reports, excluding France. Nearly 40 % of the drop in sales in French hypermarkets is said to come from just twenty stores close to a national border, which suffered greatly from the absence of foreign shoppers due to the coronavirus measures.
The net profit of the holding company (recently renamed ELO) was halved from 678 million euros to 344 million. Nevertheless, Auchan Retail faces this year “with optimism”, driven by “plans to accelerate digital development and invest again”. Last year, Auchan held merger talks with competitor Carrefour, but these did not (yet) lead to anything. Nevertheless, the group emphasised that it is very healthy financially, after the Taiwanese activities of the group were sold last year to RT Mart.
Stores in Russia and Ukraine
For 2022, the coming difficulties are already presenting themselves: Auchan also has stores in Russia and Ukraine. For the time being, most of the stores are still open, Claude said Friday afternoon, but that could change quickly. On Thursday, 80 % of the Ukrainian branches were open, and the CEO would like to keep it that way in the interest of the local population. Auchan has about 5,000 employees in the country.
Closures in Russia are not on the agenda for the time being. The French group has 231 stores there, generating a turnover of 3.2 billion euros. The company had good prospects there – before the war – and emphasises its strong local roots in each country. Whether the retailer will nevertheless have to withdraw from Russia as a result of possible sanctions remains to be seen.
