The perils of running an international business were demonstrated clearly by Europe's leading retail group this week. France's Carrefour, which operates throughout Europe, Asia and Latin America, reported third quarter sales down 1.5 per cent as a result of a 7.1 per cent decline in exchange rates, with Latin America the principal cause for concern.
But Carrefour remained positive about the results, highlighting the fact that sales grew by 5.6 per cent at constant exchange rates, thanks to good performances from its leading markets and an acceleration of growth in developing markets.
Total turnover for the quarter reached €18.9 billion, while figures for the first nine months of the year were 1.5 per cent lower at current exchange rates (+3.9 per cent at constant rates) to €55.9 billion. A 34.1 per cent decline in sales from the Americas over the nine months, due almost entirely to the economic concerns there, wiped out the strong gains elsewhere, and in particular in Europe (excluding France).
Quarterly sales in France - Carrefour's biggest market - were up 2.4 per cent to €9.8 billion, slightly lower than some analysts had predicted but nonetheless a solid performance in a market which is notoriously difficult. In the rest of Europe third quarter sales rose 8.5 per cent (8.6 percent at constant rates) to €6.5 billion, while Asian sales were down 1.4 per cent in actual terms (but up 5 per cent on constant rates) to €1.3 billion.
The economic woes and currency devaluations in Brazil and Argentina meant that that sales from the Americas were down 42.3 per cent to €1.4 billion. On a constant currency basis they rose 11 per cent.
There was also a steady progression in sales growth from quarter to quarter (at constant exchange rates), with the Americas improving considerably since the start of the year and with just a slight drop in Asian sales growth from the second to third quarter. For the year as a whole, the company is predicting 5 per cent growth at constant rates.
Carrefour opened 16 hypermarkets, nine supermarkets and 50 hard-discount stores throughout the world during the third quarter. The hypermarkets were in France, Greece (two), Poland, the Czech Republic, Turkey, Portugal, Mexico (two), Colombia (two), Brazil, China (two), Korea and Thailand.
The supermarkets were in Spain (two), Greece (three), Italy (three) and Poland, while the discount stores were spread between France (12), Spain (11), Greece (three), Turkey (seven), Brazil (16) and Argentina. In addition, all hypermarkets in Switzerland have taken the Carrefour fascia since September.