French retail giant Carrefour reported improved fourth-quarter sales in France and Spain, two of the countries hardest hit by European's economic slowdown, but doubts remain if the turnaround is solid.
Read more: Carrefour Buoyed by France, Spain - WSJ.com
Carrefour said Thursday that fourth-quarter sales rose 3.2% on an organic basis, stripping out exchange rate fluctuations, acquisitions and disposals. On a reported basis, sales fell to €22.2 billion ($30.2 billion) for the period—down from €22.85 billion a year earlier as a result of weaker currencies in Brazil and Argentina. Carrefour competes with Tesco PLC for the title of world's second-largest retailer behind Wal-Mart Stores.
Sales grew faster in France than in any quarter since 2007, Chief Financial Officer Pierre-Jean Sivignon said. Stripping out gasoline sales, sales in Carrefour's biggest market grew 1.7%. "We had good momentum in all our formats," Mr. Sivignon said, from hypermarkets to convenience stores.
Carrefour's performance in France has been at the core of Chief Executive Georges Plassat's strategy since he took the helm of the company over a year and a half ago. The mantra in the sector is that a retailer must be strong in its home market before it can succeed abroad. Mr. Plassat has revived Carrefour in France with a clear emphasis on low-prices and store renovations.
Yet analysts fixated on the fact that the French sales increase was lower than its third-quarter comeback, when sales rose 3%. "Sales at hypermarkets were slightly disappointing," said Citigroup nalyst Alastair Johnston. Mr. Sivignon said sales in November lifted the entire fourth quarter.
In Spain, Carrefour logged 1.2% sales growth in the fourth quarter—the first time it has moved into positive territory in "many years," said Mr. Johnston. Spanish consumers significantly cut back on their shopping bills during the country's economic crisis. At the end of last year, some got extra spending money: the payment of Christmas bonuses to civil servants that were suspended in 2012—which Carrefour said boosted its sales.
Further abroad, Carrefour had stronger growth in Brazil, its second-largest market.
Sales increased 6.8%, excluding the heavy penalty of a weak Brazilian real. Carrefour opened several new stores and is considering listing its Brazilian unit on the local stock market to finance further expansion, Mr. Sivignon said. "We will grow in Brazil and an IPO is one of the items we have in our toolbox to finance expansion in the coming years," he said.
But sales in China, long Carrefour's second growth engine alongside Brazil, didn't shine. Carrefour cited a "slowing consumption environment" for its 3.1% drop in sales at stores open at least a year. "Asia saw the most disappointing performance," said Sanford Bernstein analyst Bruno Monteyne.
Read more: Carrefour Buoyed by France, Spain - WSJ.com
