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Retailer Casino's first-quarter sales growth slows as France weaker

Retailer Casino's first-quarter sales growth slows as France weaker
FILE PHOTO: A logo of French retailer Casino is pictured outside a Casino supermarket in Nantes, France, July 20, 2017. REUTERS/Stephane Mahe/ Copyright Stephane Mahe(Reuters)
Copyright Stephane Mahe(Reuters)
By Reuters
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By Dominique Vidalon

PARIS (Reuters) - Retailer Casino, battling investor concerns over its high debt and ability to generate cash, said revenue growth slowed in the first-quarter, as weaker sales in its core French market overshadowed a more dynamic performance in Brazil.

Casino, which this week strengthened its ties with E-commerce giant Amazon, reiterated on Thursday its goals to deliver 10 percent growth per year in trading profit for its French retail business between 2019 and 2021, and the generation of 500 million euros ($557 million) in free cash flow per year.

Casino, which has been selling assets to reduce its debt and which also controls Brazil's Grupo Pao de Acucar, posted first-quarter sales of 8.853 billion euros.

Excluding acquisitions, currency effects and revenue on fuel, sales rose by 4.3 percent compared to 5.1 percent growth in the fourth quarter of 2018.

Sales in Brazil, the second-largest market after France, grew 7.1 percent on a same-store basis, boosted by the strong performance of the Assai cash and carry stores.

In France however, same-store sales weakened in most store banners, including Franprix and Monoprix though they slightly improved at the Geant Casino hypermarkets where they rose 0.3 percent after a flat performance in the fourth quarter 2018.

Along with domestic peers such as Carrefour and Auchan, Casino faces intense price competition in its home market as well as challenges from online.

In March, Casino unveiled a three-year plan to boost profit growth by monetising client data, savings from purchasing deals and a greater focus on e-commerce, organic food, convenience stores and energy services.

It is also expanding its online offering through a deal to use UK online retailer Ocado's platform and this week it expanded its partnership with Amazon, with Amazon installing pick-up lockers in Casino stores and making more of the French company's products available on Amazon.

"It's a very good deal for us. It gives customers additional services and brings additional traffic," Finance chief David Lubek told a conference call.

The company, which had its credit rating further pushed into junk by Standard & Poor's last week and was also downgraded by Moody's this month, has embarked upon asset sales to reduce its debt and ease concerns over the financial position of both Casino and its parent holding company Rallye.

Last month Casino raised its goal for the disposal of non-strategic assets to at least 2.5 billion euros, to be achieved by the first quarter of 2020. Lubek said on Thursday he was confident to deliver and possibly exceed that goal.

Some analysts have however expressed doubts over the benefits of this strategy. "How long can asset disposals continue without hollowing the company too much ?," Bernstein analyst Bruno Monteyne said in a recent note.

(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Alexandra Hudson)

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