Carrefour saw its revenue growth accelerate in the first quarter, reflecting strong food sales in March in all its markets and notably in the core French market, as people stayed at home due to coronavirus lockdowns.
Carrefour, Europe's largest food retailer by sales, said it was sticking to its financial and operational targets under its 2022 strategy plan to boost sales and profits.
"We are living a defining moment in our sector. This crisis underscores the relevance of Carrefour's strategy," Chief Executive Alexandre Bompard told analysts.
The novel coronavirus crisis also made the need for a sound cost structure and a healthy balance sheet even more important, he said. Carrefour is in the midst of a five-year plan it launched in 2018 to cut costs and boost e-commerce investment as it seeks to lift profits and revenue and help it tackle competition from Amazon.
Turnaround Strategy
Its turnaround plan also includes expanding into convenience stores, scaling back non-food items and putting greater emphasis on organic food.
Finance Chief Matthieu Malige said that first quarter profitability was "close to our initial expectations". Carrefour benefited from stronger food sales but also incurred extra costs tied to keeping its supply chain running smoothly, protecting its employees and staff during the crisis, and rewarding employees who were in the field.
First quarter sales reached €19.445 billion, driven by a solid performance in January and February and stockpiling by households in March ahead of coronavirus lockdown measures in all the group's countries.
Once lockdown measures were implemented, consumers favoured convenience and supermarkets which are closer to home and more accessible at the expenses of hypermarkets, a trend that was flagged by French rival Casino last week.
Group sales rose 7.8% on a like-for-like basis from a year earlier, accelerating from 3.1% growth in the fourth quarter of 2019.
French Operations
In France alone, sales rose 8.1% at Carrefour's supermarkets and 6.8% at its convenience stores.
Carrefour's large hypermarkets, which generate 51% of Carrefour sales in France and whose revival is one of Bompard's priorities, had however a more subdued sales performance as consumers favoured local and online shopping.
Same-store sales at Carrefour's hypermarkets rose 0.9% in the first quarter following a 3.4% decline in the fourth quarter 2019.
Bompard told analysts that purchasing power was going to be a major concern in all countries once lockdowns ease, and that hypermarkets could be "a good answer to purchasing power concerns".
In Brazil, Carrefour's sales growth of 7.6% was boosted by a strong performance for the Atacadao cash-and-carry stores.
