Europe's top retailers struggle
LONDON (Reuters) - Europe's biggest retailers will publish Christmas sales figures next week amid signs that a tentative economic recovery has yet to boost spending in some countries and consumers everywhere will remain under pressure in 2010.
France's Carrefour (CARR.PA), the world's second-largest retailer behind U.S. group Wal-Mart (WMT.N), will post fourth-quarter sales after the market close on Thursday, while Tesco (TSCO.L), the world's number three, and Germany's Metro (MEOG.DE), number four, will report on Tuesday.
Analysts will look for signs all three are tackling sluggish performances in home markets, and that Carrefour and Metro are making progress on big cost saving plans announced in 2009.
The DJ Stoxx European retail index .SXRP surged 35 percent last year, making it one of the best performing sectors, on hopes of a consumer recovery.
But data on Wednesday showed euro zone retail sales fell 1.2 percent in November from October, including falls in Germany, France and Spain.
The picture seems brighter in Britain, where several store groups have posted healthy Christmas sales, though retailers there warn trading could get tougher in 2010, with taxes set to rise to cut government debt.
There's similar caution in the United States, even though stores mostly beat December sales forecasts.
Analysts expect Tesco, which runs over 4,300 shops in 14 countries, to post a 2.9 percent rise in sales at British stores open at least a year, excluding fuel and VAT sales tax, for the six weeks to January 9, according to the average forecast of 12 polled by Reuters.
Estimates ranged widely from up 2 to up 4 percent but while the average forecast is in line with a third-quarter increase it would be the weakest Christmas result since the early 1990s.
Tesco has been lagging sales growth at its main rivals due to its greater exposure to discretionary non-food ranges and to shoppers switching to its cheaper discount range.
There have been signs it is closing the gap after it doubled rewards on its loyalty scheme in August.
But analysts think Tesco's accounting policy on its loyalty card may have boosted Christmas sales by 0.5 to 1 percent, making the underlying comparison against rivals even worse.
J. Sainsbury, the country's third-biggest grocer, on Thursday beat forecasts with a 4.2 percent rise in underlying sales for the 13 weeks to January 2.
Analysts expect total sales at Tesco to have grown by a high single-digit percentage, helped by a continued improvement in other European markets and Asia.
The group is tipped to post a 9 percent rise in operating profit to 3.5 billion pounds (3.1 billion pounds) for the year ending February, according to Thomson Reuters I/B/E/S Estimates.
Metro, which runs department stores, supermarkets, cash-and-carries and electrical stores, is expected to report weaker numbers due to its larger exposure to non-food goods, weak eastern European markets and falling food prices.
Analysts anticipate a 2 percent fall in fourth-quarter sales to 19.7 billion euros ($28.2 billion), according to the average forecast of 13 polled by Reuters, which should equate to a small rise in sales at constant currencies.
That would be better than the 3.7 percent decline over the first nine months of 2009, helped by easier comparable figures from the fourth quarter of last year. But investors are jittery after weak numbers from German home improvements retailer Praktiker (PRAG.DE) on Thursday.
Analysts think Metro, which runs over 2,100 outlets in 33 countries, is on track for a 14 percent fall in 2009 operating profit to 1.9 billion euros, according to ThomsonReuters I/B/E/S, cushioned by cost cutting under its "Shape 2012" plan.
Carrefour, which has over 15,000 company-owned or franchised stores across 35 countries, is expected to deliver a 1.1 percent rise in fourth-quarter sales to 26.03 billion euros, according to a Reuters poll of 15 analysts.
That should translate to a slightly bigger rise at constant currencies and, like Metro, would improve on the nine-month decline of 2.3 percent thanks to easier comparable numbers.
Carrefour has been hit by falling grocery prices and weak non-food demand in western Europe, as well as underperformance in its core French hypermarket business. These have offset growth at its French supermarkets and in South America.
The group warned at third-quarter results it did not expect trading conditions to improve in the fourth quarter and that 2009 operating profit would be at the lower end of its 2.7-2.8 billion euro forecast range -- down about 18 percent on 2008.
Like Metro, Carrefour is restructuring, but it has yet to articulate a plan to turn around its French hypermarkets.
Also on Thursday, Belgian grocer Delhaize (DELB.BR) is expected to show its continued resilience to falling food prices and stiff competition in its main U.S. market, while electricals retailer DSG DSGI.L and household goods group Home Retail (HOME.L) are tipped to confirm a solid Christmas in Britain.
Carrefour shares have underperformed the DJ Stoxx European retail index by 2 percent over the past year, while Tesco has lagged by 8 percent. Metro has outperformed by 26 percent, bolstered by hopes for a recovery in non-food spending.
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DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.