French retail group Guyenne & Gascogne has reported a 4.7 per cent increase in sales for 2002 to €1.2 billion, pushing up operating profits by an impressive 35.5 per cent to €41.8 million. But net profits, which had increased by 30 per cent in 2001, rose by just 6.2 per cent in 2002 as a result of lower exceptional gains.
The company, which is one of the main franchise holders for the Carrefour chain, said that the good performance was driven by all three parts of the company.
The G&G parent company finally began to see a return on its investment of the last few years, with operating profits increasing by 17 per cent to €7.5 million. Turnover at the parent group was up 6 per cent, ahead of the national average for French retailers in 2002, with the result that the company increased its market share during the year.
Meanwhile, the company's subsidiary Sogara, in which it has a 50 per cent stake along with Carrefour, also improved during 2002, with a 40 per cent increase in operating profits, despite a relatively small increase in like-for-like sales. The unit also increased its stake in Centros Comerciales Carrefour, the Spanish arm of the French retail giant, which in turn contributed a 12 per cent increase in operating profit on the back of a 9 per cent rise in sales.
G&G said that both Sogara and CCC had benefited from the completion of the restructuring which began after Carrefour acquired Promodès in 2000, with the synergies gained in both France and Spain leading to improved profitability at the two units.
This year is likely to see further gains in profitability for the parent company, with a number of stores set for expansion and the possibility of several others being acquired. Sogara is also planning to expand its operations (three new stores, plus two expansions), while CCC will open four new hypermarkets this year and has plans for a further 29 supermarkets as well.
"Our aim is to double turnover at the parent company over the next 10 years," the company said in a statement. "This growth strategy will target independent retailers, or even a chain of independent retailers, and could also include extending our trading area to include the whole of south west France."
The company said that its international strategy remained centred on Spain, a market which offered substantial growth prospects without laying the company open to problems of exchange rate fluctuations (which, ironically, took their toll on 2002 results at Carrefour itself, which has significant operations in Latin America).
Guyenne & Gascogne operates six Carrefour hypermarkets and 23 Champion supermarkets under franchise, and is a long-time partner of Carrefour. The two companies jointly own Sogara, with operate 13 large hypermarkets, and which in turn holds an 8 per cent stake in CCC, the Spanish unit of Carrefour and the biggest food retailer in Spain with 120 Carrefour and 174 Champion stores.