PARIS French retailer Carrefour (CARR.PA) said third-quarter like-for-like sales rose 0.2 percent as demand in Latin America made up for weakness in austerity-hit Italy and Spain, and its core domestic market showed signs of improvement.
The world's largest retailer after Wal-Mart (WMT.N) posted quarterly sales of 22.63 billion euros (18.2 billion pounds) on Thursday, beating the 22.57 billion average of estimates in a Reuters poll of seven analysts.
The sales figures indicate that initiatives such as offering cash-strapped French shoppers lasting price cuts that were introduced last year and further strengthened by new Chief Executive Georges Plassat are starting to have an impact.
Plassat joined Europe's biggest retailer in May with a brief to reverse years of underperformance in its main European markets where hypermarkets have been hit by competition from specialist stores and trends toward local and online shopping.
Stripping out fuel and currency effects, revenue in France declined 1.5 percent, an improvement from a 3.3 percent drop in the second quarter.
Sales at Carrefour's French hypermarkets fell 3.3 percent, against a 5.7 percent fall in the second quarter, and sales in the food sector improved for the third consecutive quarter.
Many retailers across Europe are struggling as consumers' disposable incomes have been squeezed by rising prices, muted wage growth and government austerity measures, and confidence has been sapped by the euro zone debt crisis.
Last week, Metro AG (MEOG.DE), the world's fourth-largest retailer, cut its earnings outlook for 2012, blaming rising unemployment in the euro zone and the sovereign debt crisis.
Carrefour still has big operations in some of the countries worst hit by the crisis, such as Spain and Italy, having pulled out of Greece. Spain and Italy accounted for more than 16 percent of group sales in the third quarter.
Quarterly like-for-like sales excluding petrol fell 5.4 percent in Spain and 6.6 percent in Italy.
In emerging markets, China continued to struggle amid an economic slowdown, while Brazil, now Carrefour's second-largest market after France, had like-for-like sales growth of 9.7 percent.
Carrefour shares are down 9 percent this year, underperforming a 4 percent gain in the European retail sector .SXRP.
(Reporting by Dominique Vidalon; Editing by James Regan)