Auchan hypers weather the storm

- Last updated on GMT

Related tags: Cent, Hypermarket, Wal-mart, Carrefour

Auchan, the French retail group, has reported remarkably good
figures for 2003 despite its reliance on its home market, where low
levels of consumer spending have impacted sales at a number of its
rivals.

The weak French economy has seen consumers switch from hypermarkets to discount stores over the last few months, taking advantage of prices which ometimes up to 50 per cent lower. But while hypermarkets operated by Carrefour, for example, have suffered as a result of this shift, Auchan seems to have weathered the storm far more effectively.

Total group turnover for 2003 was €28.7 billion, a 4.2 per cent increase compared to 2002, and would have been higher still (6.5 per cent) if not for the adverse currency effect entailed by its operations in Mexico and the US. Carrefour, in contrast, posted a 2.6 per cent rise to €70.5 billion.

Auchan's core hypermarket business bore up well, posting an increase of 3.4 per cent to €22.5 billion over the year, with growth at all its European operations in France, Italy (Rinascente) and Spain (Alcampo) and in China. Carrefour, in comparison, posted just 0.2 per cent growth from its French hypermarket business in 2003 (albeit to €21.4 billion, almost as much as Auchan's entire hypermarket unit).

The much smaller supermarket division, meanwhile, posted sales growth of 6.2 per cent to €5.5 billion. Total group operating profit was also up, rising 6.6 per cent to €1.1 billion.

Without a discount store format to fall back on like Carrefour (although of course margins are far lower in the discount arena, even if sales growth is higher), Auchan has been forced to focus on keeping its prices as competitive as possible throughout the year, a policy which appears to have allowed it to maintain relatively solid sales and profit growth despite tough conditions in some markets.

Related topics: Market Trends

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