Carrefour sales growth slows amid losses in China, challenges in French market

Source:Reuters Published: 2016/7/28 22:18:01

Europe's largest retailer Carrefour said underlying operating profit rose 5.3 percent in the first half while sales growth slowed in the second quarter, reflecting challenging conditions in its core French market and losses in China.

The company confirmed its financial forecasts and also said it plans to invest 2.5 billion euros ($2.77 billion) to 2.6 billion euros in renovating and expanding its stores.

Carrefour, which makes 73 percent of its sales in Europe, is pursuing a global revival by focusing on price and cost cuts and expansion into smaller convenience stores while renovating its core traditional hypermarket network.

In France, Carrefour had setbacks ranging from bad weather to strikes that hit sales at its French hypermarkets. The integration of the loss-making Dia discount stores still weighed on profitability.

The company, which is the world's second-largest retailer after US-based ­Wal-Mart Stores Inc, said its recurring operating profit in the first half of 2016 rose 5.3 percent to 706 million euros at constant exchange rates, beating the average estimate of 685 million euros in a Thomson Reuters poll.

That included a 3 percent fall at constant exchange rates to 312 million euros in France.

Pierre-Jean Sivignon, finance director of the company, said average analyst forecasts for group 2016 earnings before interest and tax of about 2.47 billion euros are "reasonable" at this stage, implying a 1 ­percent rise from last year's 2.45 billion euros.

But he cautioned this is subject to volatile currency markets.

In China, where slowing consumption has hurt sales that make up about 5 percent of the group's total, Carrefour aims to expand in e-commerce and convenience stores and open logistics centers.

Asked about Carrefour's losses in ­China, Sivignon said the group did not ­disclose those details separately, but he said he ­expected the trend of its activities in China to bottom out in the second half of 2016.

"We see an improved trend in sales in the first half compared to the trend of 2015 and we ... are starting to approach the low point. Our plans are beginning to have an effect," he told reporters.

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