July 27, 2018 / 10:38 AM / 5 months ago

Carrefour shares shine as retailer reassures on its turnaround

* Shares jump to one-month highs

* Signs of progress in Bompard’s overhaul plans

* Stock still down 14 pct so far in 2018

* H1 profits beat average analyst forecasts

By Dominique Vidalon

PARIS, July 27 (Reuters) - Shares in Carrefour surged higher on Friday after stronger-than-expected first half results provided some clear signs of progress in chief executive Alexandre Bompard’s overhaul plan for the supermarket retailer.

The rally, which followed a 36 percent fall in Carrefour shares since Bompard took over in July 2017, propelled Carrefour shares to one-month highs. The stock was up 11.3 percent at 15.48 euros by mid-session trading.

“The overall impression of the analyst session was of rapid execution on all aspects of the transformation plan,” said Bernstein analyst Bruno Monteyne.

Carrefour said late on Thursday that first-half recurring operating profit rose 5.8 percent to 597 million euros ($694 million), beating the average 523 million forecast by analysts.

Profits were boosted by 520 million euros of cost savings and robust sales in Brazil, offsetting weakness in Carrefour’s core French market.

In January, Bompard announced a five-year overhaul plan to cut costs and jobs, boost E-commerce investment and seek a partnership in China with tech giant Tencent in an effort to lift profits and sales and tackle the growing competition from U.S. online retail giant Amazon.

The “Carrefour 2022” plan has been relatively well received by investors. Nevertheless, Carrefour still faces difficulties in France, with competition from the likes of Amazon and pressure from discounting at rivals such as Leclerc.

“Encouraging first half results. Carrefour reported better results in all regions with the exception of France. Execution of the restructuring plan is on track,” wrote Barclays, which raised earnings per share (EPS) forecasts by an average of 5 percent and kept an “equal-weight” rating on Carrefour.

Nevertheless, Barclays said the general outlook for Carrefour still only offered “limited visibility”, while brokerage Raymond James said 2019 would be vital in terms of whether or not Carrefour won back market share.

“We are highly encouraged by the 520 million euros cost savings achieved in H1 2018, as the benefits from staff reductions have not yet come into play. 2019 will provide more leeway to invest in prices, loyalty schemes whenever necessary. This will be critical to regain market share down the road,” wrote Raymond James.

$1 = 0.8600 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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