France's Carrefour has said it is looking to 2022 with confidence, after its sales growth accelerated in the first quarter, driven mostly by Brazil, its second-largest market.
In an inflationary environment made worse by the Ukraine crisis, Carrefour has set out its goal to protect the purchasing power of customers and at the same time reinforce its economic model, its finance chief Matthieu Malige told analysts.
To do so, the French retailer said it would rely on its Carrefour branded products, promotional activities and loyalty programmes while also stepping up cost savings.
Europe's largest food retailer reiterated a target to generate free cash flow above €1 billion in 2022 and with cost inflation accelerating, it said it now aimed for more than €900 million in cost savings this year.
Cash is key to the French food retailer's plans to step up its digital commerce expansion.
The firm also said that having achieved €400 million on the €750 million share buyback programme it announced in February, it would launch the second tranche in the coming days.
Read More: Carrefour Confident On Future After 2021 Profit Rise, Record Cash Flow
Quarterly Performance
Carrefour reported that its first quarter sales reached €20.2 billion, marking like-for-like growth of 3.4%, driven by solid growth in Brazil and Spain, while in the core French market sales were flat. This was an acceleration from 0.7% sales growth for the group in the fourth quarter 2021.
But sales at French hypermarkets, whose revival has been a priority for Carrefour boss Alexandre Bompard, fell 1.1% in the quarter compared with a 1.3% decline in the fourth quarter 2021.
"This highlights the weakness of the format given that lower pricing of the hyper format should benefit in the current inflationary environment," Bernstein analysts wrote in a note.
Turnaround Plan
Carrefour is in the last leg of a five-year plan begun in 2018 to cut costs and boost e-commerce investment to improve profit and sales, as it battles online rivals such as Amazon and discounters like Lidl and unlisted Leclerc.
Bompard, who was reappointed in May 2021 for another three years, is working on a new strategic plan and an asset review.
Carrefour shares have gained 27% so far this year, but still trade 7% below when Bompard took over in July 2017.
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