Carrefour on Tuesday raised its goal for cost savings under its strategic overhaul plan as Europe's largest retailer delivered savings of €480 million ($563 million) in the first half and vowed more price cuts in its core French market.
Carrefour said group operating profits rose 29.1% at constant exchange rates from the same period last year to €718 million. This compared with €628 million in a Reuters poll of three analysts.
The performance reflected cost cuts and strong second-quarter sales in Brazil and Spain, which made up for a more subdued performance in France where sales at hypermarkets fell 3.6% like-for-like due to coronavirus lockdowns.
During the government-imposed lockdowns, customers have favoured supermarkets close to home and convenience stores as well as e-commerce.
Since France ended its lockdown in mid-May, hypermarket sales have showed a marked improvement, Carrefour said.
"Our first-half performance is very solid: It proves the resilience of our model, its dynamism and its profitability," chairman and chief executive Alexandre Bompard said.
Commenting on prospects for the third quarter, Bompard said Carrefour continued to benefit from its good positioning during the crisis and would continue to cut prices in France where it faces fierce competition from local rivals and from Amazon.
"We still have room for (price) improvement. We are also capable of delivering stronger than expected cost savings," he said.
Cost Savings Target
The company is now targeting cost savings of €3.0 billion on an annual basis by the end of 2020 against a previous target of €2.8 billion.
Savings since the start of the plan now total €2.440 billion. Finance chief Matthieu Malige said he was confident savings momentum would continue beyond 2020.
Carrefour is in the midst of a five-year plan it launched in 2018 to cut costs and boost e-commerce investment to improve profits and sales, as it seeks like its peers to tackle competition from online rivals such as Amazon.
It is also expanding into convenience stores to reduce its reliance on hypermarkets, focusing more on organic products and private labels, having last year sealed a purchasing alliance with British rival Tesco
Carrefour stuck to its other financial and operational targets under its 2022 strategy plan.