Retailer Casino's Q2 Sales Accelerate, Group Keeps Financial Goals
French supermarket retailer Casino said on Tuesday that sales growth accelerated in the second quarter, reflecting further improvement in its core French market and better trends in Brazil.
Casino, which last month said it aimed to complete 1.5 billion euros ($1.8 billion) of asset sales by early 2019 to help cut debts, said it was keeping all its annual financial objectives.
The company, whose credit rating was cut to junk by Standard & Poor’s in March 2016, is under pressure to show it can revive profits in France while conditions in Brazil stay tough.
Casino, which controls Brazil’s top retailer Grupo Pao de Acucar, said second-quarter group sales reached 8.916 billion euros, above the 8.8 billion euros average in a company-compiled consensus of analysts’ forecasts.
Stripping out acquisitions, currency effects and revenue on fuel, sales rose 5.2 percent against 3.1 percent growth seen in the first quarter.
Casino, along with domestic peers such as Carrefour and Auchan, faces intense price competition in its home market as well as competition from online players such as Amazon which has made in-roads in the sector.
In order to cut costs, protect margins and cope with changes in shopping habits, particularly amid younger generations, retailers are entering new buying alliances and sealing partnerships with tech giants.
In France, Casino has cut prices and reduced retail space for non-food items at its Geant hypermarkets in response to competition from online and smaller convenience stores.
It has also handed the management of its consumer electronics products to its CDiscount unit and is rolling out CDiscount areas in its stores. It has also increased its focus on organic and fresh food products.
Same-store sales at the Geant Casino hypermarkets in France rose 2.8 percent, an acceleration from 2.1 percent growth in the first quarter of 2018, with food sales up 4.3 percent, helped by growth in sales of organic food.
The group’s Monoprix, Franprix and Casino-branded stores also posted robust performances, while same store food sales in Brazil rose 4.7 percent in the quarter, lifted by the strong performance of the Assai cash-and-carry outlets.
For 2018, Casino has forecast organic growth above 10 percent in consolidated profit, excluding tax credits, and for organic growth in French operating profit, excluding real estate activities, also above 10 percent.
Casino shares are down by nearly 33 percent so far in 2018, partly on concerns over Casino’s balance sheet and parent group Rallye’s ability to refinance its debt.
($1 = 0.8538 euros) (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta)
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