French retail giant Groupe Casino has reported a 5.2% increase in consolidated net sales in its 2022 financial year, to €33.6 billion, buoyed by what the company says was 'strong growth in Latin America [and] accelerated expansion in France'.
Here are 5 key takeaways from Groupe Casino's results.
1. Hypermarket Conversion Stepping Up
Groupe Casino's French hypermarket estate reported a 6.2% decrease in same store sales in the fourth quarter of the year – a disappointing performance given that period's status as the 'golden quarter'. In its statement, it noted that both its hypermarkets and supermarkets faced a 'more difficult competitive environment' as the year drew to a close.
The group said that it is 'accelerating' the conversion of Géant hypermarkets to Casino Hyper Frais stores, with 32 new conversions completed in the fourth quarter, following on from 15 conversions in Q3 and four in Q2.
It plans to convert a further ten outlets in the first half, as it continues to reduce its hypermarket footprint. Elsewhere, in May 2022, 20 Géant stores were converted to Casino supermarkets.
Whether the conversion process is making a difference, however, is still up for debate – as analyst Clément Genelot of Bryan, Garnier & Co observed, Casino's low sales numbers in its hypermarket (and supermarket) portfolio indicate a volume decline that could be as high as 15% to 20%, given the fact that inflation in France is running at elevated levels (as high as 12.6% in December).
In a briefing note, Genelot said, 'Casino is obviously suffering from: i) its unsustainably high price positioning leading to a massive volume decline, ii) failing high prices combined with a high promotions strategy, iii) a failing strategic repositioning of its Geant hypers into Casino HyperFrais.'
2. Putting Trust In Convenience
Net sales in the group's convenience banners grew by 6.6% on a same-store basis over the year and by 4.4% in Q4, with 652 stores opened in 2022, almost two stores per day. Many of these were franchise operations, with store expansion in the Auvergne-Rhône-Alpes, Occitanie and Provence-Alpes-Côte d'Azur regions led by the arrival of new master franchisees.
Its Franprix convenience banner saw sales up by 3.4% on a same-store basis over the year and by 5.5% for the quarter, with the group planning to maintain the pace of new store openings in 2023, it said.
3. Assaí Continues To Grow
The trend towards warehouse-style retailing in Brazil shows no sign of abating, with Casino reporting that its Assaí banner reported +38% organic growth in the final quarter of the year, led by same-store sales growth of 10.5% and 60 stores opening over the course of the year, despite what it said was an 'unsettled macroeconomic environment'.
Casino said that the performance of the 47 Assaí outlets that it converted from Extra hypermarkets in the period 'are already among the best performers in terms of customer traffic', which is likely to lead the retailer to double down on this format.
As of year-end, the group's Extra hypermarket estate is down to just three, from 72 at the start of the year.
Casino's position echoes that of Carrefour, which has toasted the performance of its Atacadão banner (a similar format to Assaí), even going so far as to tease its introduction to France.
As Barclays analyst Nicolas Champ noted, however, Casino's impressive sales figures in Latin America (+12.0% in the fourth quarter, including +9.7% in Brazil) was actually lower than the food inflation rate in the country during the period (of around 13%). He added that Casino's performance was below that of Carrefour for the period.
Read More: French Retailer Casino Launches Stake Sale In Brazil's Assaí
4. Subscription Services On The Rise
Amidst a turbulent economic backdrop, Casino has turned to subscription services as a means to engage shoppers with the promise of additional discounts – for example, its Monoprix Plus scheme, enables shoppers to avail of a 10% reduction on their basket for €9.90 per month.
In its full-year statement, Casino noted that this strategy, along with similar subscription agreements at its Casino and Naturalia banners, has proven to be a 'success', with more than 370,000 paying subscribers signed up as of year-end, up from 300,000 in June.
5. Leader Price Lives On
Casino may have sold the bulk of its Leader Price store estate to Aldi, but the brand lives on – and indeed appears to be thriving – as a private label offering. According to the group, sales of Leader Price products saw 95% growth in the fourth quarter in the group's supermarkets and hypermarkets, with a 'core selection' of some 2,000 products now available.
Elsewhere, the group continues to introduce Leader Price 'shop in shops', offering between 300 and 1,200 SKUs and in-store 'corners' (offering 50 to 300 SKUs) – some 23 'shop in shops' are expected to open in the group's hypermarkets in the first quarter of this year, along with 200 in supermarkets.
The group is also planning to open as many as 18 standalone Leader Price outlets in the quarter, as it seeks to broaden its appeal for value-hungry shoppers.
Read More: Casino To Step Up Promotions As Cost-Of-Living Crisis Weighs On French Sales
© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.