French retailer Auchan has suffered a loss of almost 1.5 billion euros during the first half of 2019, as exiting the Italian market proved very costly. However, the chain sees signs that better times are on the way.
It is true that the huge loss is mostly due to the exit from the Italian and Vietnamese market: without those one-off costs Auchan would have made 124 million euros of net profit. The sale of the stores in both countries were part of a larger cost-cutting plan.
Auchan has seen its turnover drop by 2.6 % in the first six months of the year: while turnover did rise in nine of its markets, disappointing sales in Russia and France cancelled out those growths completely. Another negative influence for the company's turnover were adverse exchange rate fluctuations.
The aforementioned cost-cutting plan did allow Auchan to raise its profitability sharply: its EBITDA rose by 6.4 % to 984 million euro. Its French home market was a major contributing factor in this, as the company was able to close 21 loss-making stores. In Russia, Spain and the Ukraine, badly performing stores were closed as well.