Retailer Carrefour's first-quarter sales growth slows, shares fall
today Apr 12, 2018
Carrefour said sales growth slowed in the first quarter amid continued weakness in its core French market, reminding investors that the road to recovery for the supermarket retailer would be long.
Carrefour's shares fell on Thursday to touch their lowest level since October 2012, down 3.16 percent by 0701 GMT, the worst performer on the CAC-40 index of French blue-chip stocks.
Carrefour, which is Europe's largest retailer, said sales at its French hypermarkets turned negative again amid bad weather conditions, further stiff competition from traditional and online rivals, and strikes during the Easter holiday.
Late on Wednesday, Carrefour had given a cautious outlook for this year after sales growth slowed in the first quarter, with continued weakness in its core French market suggesting that the supermarket chain faces a long road to recovery.
"By the equivalent stage in his tenure Dave Lewis had already had a marked impact on Tesco's like-for-like sales performance," said Bernstein analyst Bruno Monteyne, who kept a "market perform" rating on Carrefour.
"Mr Bompard will probably get the benefit of the doubt for now, but for his turnaround to be credible he will soon need to demonstrate a topline turnaround," he added.
First quarter sales reached 20.776 billion euros ($25.73 billion), slightly below the median analysts' estimates for sales of 20.869 billion euros in a poll for Reuters compiled by Inquiry Financial.
Growth slowed to 0.4 percent on a like-for-like basis excluding fuel and calendar effects, from 1.9 percent in the fourth quarter of 2017.
Carrefour unveiled in January plans to cut costs and jobs, boost E-commerce investment and seek a partnership in China with Tencent in a bid to boost profits and revenues and help it tackle competition from Amazon.
"While a number of one-offs (weather, strikes), which were not quantified by management, contributed to the operational disruptions, we worry about the direction of the French margins into 1H," wrote JP Morgan analysts, who kept a "neutral" rating on Carrefour shares.
Deutsche Bank analysts cut their 2018/2020 earnings per share estimates on Carrefour by 2 percent on average, while Barclays said it was lowering its earnings per share estimates on Carrefour by 6 percent on average.
"Although we consider that the group's decision to streamline its cost structure and accelerate its online strategy will bear some fruit in the medium-term, we believe that earnings momentum will remain weak in the short term," wrote Barclays.
© Thomson Reuters 2019 All rights reserved.