PARIS (Reuters) - French supermarket retailer Casino (CASP.PA) reported solid first-quarter sales on Tuesday, allowing it to keep its full-year profit goals on track thanks to accelerating sales at its French hypermarkets and signs of improvement in Brazil.
Casino, whose credit rating was cut to junk by Standard & Poor’s in March 2016, is under pressure to show it can revive sales and profits at home as conditions in Brazil remain tough, due in part to food deflation.
“Strong first quarter sales gives us comfort over the detailed guidance we gave in March,” Chief Financial Officer Antoine Giscard d’Estaing told analysts.
The positive sales trend in France was expected to continue in the second quarter while economic trends were more favourable in Brazil, where food deflation would ease in the second half of the year, he said.
For 2018, Casino reiterated its prediction of organic growth above 10 percent in consolidated profit, excluding tax credits, and of organic growth in French operating profit, excluding real estate activities, also above 10 percent.
Giscard d’Estaing, however, would not comment on analysts’ estimates for 2018 earnings before interest and tax, which stand at 1.236 billion euros according to ThomsonReuters I/B/E/S.
Casino, which controls Brazil’s Grupo Pao de Acucar (PCAR4.SA), reported total sales of 8.9 billion euros ($11 billion) for January-March, in line with analysts’ expectations.
Excluding acquisitions, currency effects and revenue on fuel, sales rose by 3.1 percent against 3.2 percent growth in the fourth quarter of 2017.
The group’s Monoprix chain last month became the first French retailer to agree to sell groceries via Amazon (AMZN.O) and Casino’s overall quarterly performance contrasted starkly with its larger rival Carrefour (CARR.PA) - whose French hypermarket sales turned negative again in the quarter amid stiff competition and strikes during the Easter holiday.
Casino shares, which had fallen 17 percent so far in 2018, were up 0.3 percent at 42.09 euros in early session trading.
Brokerage Bryan Garnier raised its rating on Casino to “buy” from “neutral”, saying the quarterly sales “could bring some reassurance as to relative strength of the commercial momentum”.
In France, Casino has cut prices at its Geant hypermarkets and reduced retail space for non-food items in response to competition from online and smaller convenience stores. It has also increased its focus on organic and fresh food products.
Same-store sales at the Geant Casino hypermarkets in France rose 2.1 percent, an acceleration from 0.3 percent growth in the fourth quarter of 2017, with food sales up 4.2 percent.
The group’s Monoprix, Franprix and Casino-branded stores also turned in robust performances, while same store food sales in Brazil rose 2.2 percent in the quarter, lifted by a 9.4 percent rise at its Assai cash-and-carry outlets.
Casino has begun talks on a forming a partnership regarding the purchasing of food and non-food items with domestic rival Auchan [AUCH.UL], and it is also expanding its online offering through a deal to use UK online retailer Ocado’s (OCDO.L) platform.
With the Ocado and Amazon deals, Casino “will significantly increase its reach, win new clients and generate profitable growth,” added Giscard d’Estaing.
($1 = 0.8076 euros)
Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Susan Fenton