The sales of Casino in France continue to improve but the deficit remains, while the sales abroad are driving the group’s growth. That sums up the situation of the French group, 11th worldwide distributor. The general meeting of shareholders which was held this morning in Paris was an opportunity for Jean-Charles Naouri, CEO, to reassure them, and including about the French market, which raises concerns. For the first quarter, France, which accounts for 37% of the group turnover, saw its sales fall by 2.1% compared to the first quarter of 2014. But the situation is improving: at the the end of 2014, sales were still dropping by 3.1%.
The French retailers of the group are finally starting to benefit from efforts on price cuts, but the process is very long. In 2014, Casino massively decreased the prices of its hypermarkets Géant and its Leader Price discount stores. For Leader Price, the effort represented an investment of € 125 million. A charge which affected the operational outcome down to € 396 million against € 555 million a year earlier. But results are beginning to show.
The good news came last week from Kantar Worldpanel institute: Leader Price is the only brand in France to win market shares, even though it is only modest (+ 0.1%), over the period from mid-March to mid-April. “This is the fourth consecutive time for the brand that finally takes the benefits of its price reduction strategy,” says Kantar. In 2015, “the group as an objective to increase France’s annual turnover in organic growth”, said Jean-Charles Naouri. An objective which will also be backed by the recovery of Géant hypermarkets and the strength of Monoprix, which continues to see its sales increase one quarter after the other.
The cost of the price war in France, which has been keeping all brands into a deficit, was offset by the excellent margins recorded abroad: 8.2% in Brazil with GPA, 8.4% in Colombia with Exito and 11.4% in Thailand with Big C. In Brazil, the group focuses on the development of the cash & carry concept as the country is experiencing a slowdown in economic growth.
To his shareholders, not quite asleep yet, Jean-Charles Naouri said the turnover grew by 67% over the past 5 years to reach € 48 billion. He demonstrated that the distributor outperformed the CAC 40 over the last 5 years with an annualized return on investment of nearly 10%. And all that when France was experiencing a slowdown.