PARIS Retailer Casino (CASP.PA) said it would hit its French profit forecast for the year on Thursday, despite a slowing of third quarter sales growth due to a weaker performance in France which overshadowed robust food sales in Brazil.
Casino, whose credit rating was cut to junk by Standard & Poor's in March, is under pressure to revive profits in France, where it makes 46 percent of its sales, at a time of slower growth in Brazil, its second-largest market after France.
"We are confident on our recovery plan in France. We are very confident in achieving the 500 million euros," Chief Financial Officer Antoine Giscard d'Estaing told a conference call.
Casino is banking on price cuts to boost sales at its French stores, as well as cost cuts and savings from a purchasing deal with French retailer Intermarche to achieve its profit goal.
Excluding acquisitions, currency effects and revenue on fuel, sales rose by 2.9 percent to 10.43 billion euros ($11.7 billion), down from 3.8 percent in the previous quarter.
By 0752 GMT, Casino shares were 1.63 percent lower, underperforming the European retail sector .SXRP, which was off 0.96 percent.
In France, the sales slowdown reflected more favorable year-ago comparables, the closure of 282 loss-making convenience stores and the transfer of some Leaderprice stores to franchisees, Casino said.
Sales at the Monoprix chain also suffered from unfavorable weather conditions and a decline in tourist activity in Paris.
Warm temperatures also weighed on apparel sales at the Geant Casino hypermarkets where same-store sales slowed to 0.3 percent from 2.2 percent in the second quarter.
"Even if is somewhat "circumstantial", we have to admit that this trading statement brings the new impetus to a "halt" in France," Bryan Garnier analysts said in a note.
But in recession-hit Brazil, where Casino makes around 40 percent of its sales, food retail sales grew 8.3 percent, driven by the cash and carry Assai stores and promotional activity at the Extra hypermarkets.
Same-store sales at the group's Via Varejo consumer electronics unit, which accounts for 11 percent of Casino's sales, rose by 1.8 percent after growing 2.6 percent in the second quarter.
"We stabilized our sales in a market which is declining by 5-10 percent. We continue to gain market shares," Giscard said.
(Editing by Mathieu Rosemain and Alexander Smith)