Transcript Document

Strategic Preview: Q1
January – March 2013
STEPHEN SPRINGHAM
Senior Retail Analyst
15 April 2013
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A
Service
GILDAS AITAMER
Retail Analyst
Strategic Preview: Carrefour Q1
Analyst Comment:
“Carrefour is likely to post a performance in line with
previous quarters, with Brazil representing the bulk of
growth. While China is believed to have improved
over the past quarter, we think that it will be too early
to see the changes undertaken in that market filtering
through to create meaningful improvements in likefor-like sales.
“In Europe, we expect sales to be hampered by Spain
and Italy, while the domestic market should see
results in line with the previous quarter. Like-for-likes
in convenience stores are likely to be impacted by the
strong performance registered last year and so will
consequently suffer by comparison. As for
hypermarkets, general competitive pressures (such as
the significant price cut programme operated by rival
Casino) are likely to hold back possible improvements
from Carrefour’s own EDLP commitment.”
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“It may not be acutely apparent in the Q1 trading figures, but
Carrefour is slowly getting its house back into order. The
structural reorganisation of the domestic hypermarket
operations into regional (and sub-regional) divisions is a fairly
radical but necessary step. But profitability remains under
pressure in the short term as the aggressive price stance by
its competitors leaves Carrefour with no option but to invest
in price. There are also question marks as to the pace of rollout and execution of its Drive format – a potentially high
growth channel, but to date unprofitable.
“With the divestment programme now largely complete
(only a couple of markets remain in the spotlight), the
international business is a leaner operation with scope to
invest and grow. As Georges Plassat has already alluded to,
we firmly expect Brazil and China to be the main
international markets of focus going forward and welcome
any further guidance on strategy in these two countries.”
GILDAS AITAMER
STEPHEN SPRINGHAM
Retail Analyst
Senior Retail Analyst
Strategic Preview: Carrefour Q1
1. Expectations for the Quarter
2. France: Q1 Strategic Changes
3. Global: Q1 Strategic Changes
4. Outlook
5. What’s new at Planet Retail
1. Expectations for the Quarter
While we are expecting a slight improvement in France, like-for-likes will be
impacted by the stronger results (and tougher comparables) of Q1 2012.
Carrefour France: Like-for-Like Sales by Quarter, 2009-2013f (%)
0.5
0
Comparable Store Sales Growth (%)
Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013f
-0.5
-1
-1.5
-2
-2.5
Actual Like-for-Like Sales
Projected Like-for-Like Sales
-3
-3.5
Note: Includes VAT, excludes petrol.
f = forecast
Source: Planet Retail
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1. Expectations for the Quarter
A slight improvement expected for Europe’s largest retailer this quarter.
 We expect Carrefour to post slightly improved results in Q1, despite the contraction in consumer
spending across Europe in general. While the divestment phase is reportedly over, we will also be
looking for an update on possible divestments of non-core markets such as the ‘problem child’ of
Turkey and underperforming Taiwan.
 In its home market, Carrefour is likely to post negative like-for-likes given the high figures recorded
in the same quarter last year. We expect hypermarket like-for-likes to have slowed over Q1 due to
increased competition from the likes of Casino’s Géant hypermarkets, which have invested in
substantial price cuts, and the absence of a revival in consumption generally.
 Even so, we remain confident the recovery plan will drive positive performance in the longer term.
With a sustained low price campaign in its domestic market and an end to divestments – with the
one remaining question mark over Turkey - this quarter has perhaps been less flamboyant, but more
effective, with Carrefour undertaking a major back-office reorganisation aimed at improving its
supply chain, efficiencies and flexibility.
 We are expecting Brazil to remain the main growth engine, boosted by increases in the minimum
wage and consumer credit. We are looking for evidence of Plassat’s supposed improvements in
China, where structural and management changes are likely to have impacted operations. We are
hoping for updates on plans for India, where Carrefour has reportedly been in touch with the
government and where rival Auchan is now moving ahead.
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