European focus pays off for Auchan
marginally affected by exchange rate concerns due mainly to its
growing focus on core eurozone markets.
Auchan, the French retail group, has reported a 5.3 per cent rise in sales for 2002 to €27.6 billion, shrugging off the worst effects of currency devaluations which affected a number of its main rivals. At constant exchange rates, Auchan's growth would have been 6.1 per cent.
The main reason for this is the fact that the majority of Auchan's foreign operations are in Europe - which accounted for 93.9 per cent of sales, of which 63.2 per cent came from France. Asia, where rival groups such as Carrefour, Ahold and Tesco have a greater exposure to currency fluctuations, accounted for just 4.4 per cent of sales, while other markets (primarily North and South America and Morocco, also markets where other companies have greater exposure) represented 1.7 per cent of sales.
Auchan said that its hypermarket business accounted for the lion's share of sales with 78.9 per cent, with supermarkets taking 18.6 per cent and other operations the remaining 2.5 per cent.
The company also reported a 10.1 per cent increase in EBITDA to €1.7 billion, while net profits were down 11.6 per cent to €292 million due to non-recurrent exceptional expenses related to the closure of two hypermarkets in Houston, Texas, the sale of five stores in Mexico, and the cessation of the company's e-commerce operations in Spain and France.
In 2002, taking into account store closure and relocation, Auchan increased its store network by 28 hypermarkets and 28 supermarkets. The worldwide number of hypermarkets and supermarkets now stands at 309 and 601 respectively.
The group also continued its development through internal growth by opening 31 hypermarkets (five in the European Union and Morocco, seven in Eastern Europe and Russia, 18 in Taiwan and China and one in Mexico) and through internal and external growth by opening 41 supermarkets.
2002 was also marked by the successful public offer on the minority interests of La Rinascente in Italy and, in collaboration with the Casino group, the establishment of a joint international service company under the name IRTS (International Retail Trade Services).
"2002 was a year of conclusive progress in implementing Auchan's strategic plan with significant achievements in refocusing and consolidation," commented Christophe Dubrulle, chairman of the board.
Auchan has pursued a similar strategy to that of its main European rivals in expanding to markets such as Asia and South America, but the scope of its business there is less than that of other companies, meaning it has been able to weather the storm of currency fluctuations there.
But its core markets in Europe - France, Portugal, Spain and now Italy - have been the main drivers of growth, with no currency problems to concern it and a tried and tested strategy for growth. With two of the Eastern European markets where Auchan operates - Poland and Hungary - set to join the EU next year, and then probably the eurozone soon after, the group's business will be on an even more solid footing in the future.
But the company has not been completely successful. The most notable failure was in Spain, where its Alcampo unit struggled to win support for its Internet shopping programme despite a Spanish public which is broadly in favour of such schemes - as evidenced by the success of similar systems operated by Carrefour and Caprabo.
