Carrefour domestic sales up first time in over two years

Carrefour SA, France's largest retailer, said domestic hypermarket sales were up for the first time in over two years and a turnaround gathered pace, even as it shares surged to their highest since 2011.

Revenue at French hypermarkets that were open at least a year was up 1.9 per cent in the third quarter, according to statement issued by Carrefour. The last instance of the retail giant showing growth was in the second quarter of 2011.

Lower prices as also revamped outlets were helping Carrefour stage a revival in its home market, where sales had barely grown in the past decade. The stronger performance in France also served to offset weakness in regions, including Latin America, where adverse currency movements had been a hindrance.

Bloomberg quoted John Kershaw, an analyst at Exane BNP Paribas in London, as saying that the continued improvement in France and peripheral Europe offered further reassurance that the earnings recovery baked into the shares should come through.

Chief executive Georges Plassat's strategy for a domestic revival involves putting more non-branded goods on shelves and adding so-called drives, or pick-up points for online orders. The first half of the year saw Carrefour's earnings in France jump 75 per cent.

Meanwhile, Metro, Europe's fourth-biggest retailer which too had been restructuring in its bid to respond to declining sales, said it had seen growth again in home market Germany and was upbeat for the key Christmas period even as third-quarter sales took a hit from volatile foreign exchange rates.

Increase in retail sales in the euro zone exceeded expectations in August, rekindling hopes for a turnaround in a sector hit hard by weak consumer spending that stemmed from rising prices, muted wages growth and high unemployment.

The stronger performance of Carrefour and Metro contrasted with the dismal performance of UK's Tesco, which saw declining profits in central and eastern Europe hit its recovery plan.

According to Carrefour, the world's largest retailer after Wal-Mart, third-quarter sales were €21.11 billion, which represented like-for-like growth of 3.1 per cent, excluding fuel.

Closely watched same-store sales at its French hypermarkets were up 3.0 per cent, reversing a 1.1 per cent decline in the second quarter and a 2.9 per cent drop in the first as it beat analyst forecasts for a rise of 1.5-2.7 per cent.

Carrefour had struggled for years in France, which contributes over 40 per cent of group sales, partly due to a reliance on the hypermarket format it pioneered as time-pressed customers shopped more locally and online.