Carrefour, Europe's largest food retailer, said it was confident of more profit and cash flow growth this year despite high inflation, after sales growth accelerated in the first quarter.
Sales reached €22.071 billion, marking like-for-like growth of 12.3% and an acceleration from 10.9% sales growth in the fourth quarter of 2022.
This was driven by a solid performance in France, where Carrefour hypermarkets' low-cost offering attracted buyers grappling with the cost of living.
Carrefour confirmed its financial targets for 2023, which are for further growth across its main three indicators - earnings before interest, taxes, depreciation and amortisation (EBITDA), recurring operating income and net free cash flow.
"In a context of very high food inflation in most of its markets, Carrefour is staying the course and maintaining strong commercial momentum, with steady market share performance in all its key countries," chairman and CEO Alexandre Bompard said in a statement.
Read More: Carrefour Strengthens Partnership With Uber Eats In France
Focus On Private Labels
As inflation drives shoppers to trade down, Carrefour said it benefited from its focus on private labels, which make up 35% of sales, as well as promotions and accelerated expansion of discount stores and cost savings.
In the company's core French market, hypermarket sales rose 6% in the first quarter 2023 compared with a 3.7% rise in the fourth quarter 2022.
In Brazil, the group's second-largest market, the integration of the acquisition of Grupo BIG continued at a steady pace with 23 additional store conversions in the first quarter. All conversions will be completed in the second quarter, six months earlier than planned, it said.
Carrefour also said it had initiated its €800-million share buyback plan, with €200 million completed to date.
Commenting on the group's performance, Barclays analyst Nicolas Champ said, "Carrefour 1Q sales were broadly in line with our expectations, driven by accelerating food inflation and continuing market share gains. The group confirms all its financial targets for this year."
Commenting on its performance, Joe Dawson, retail analyst with GlobalData, said, “Carrefour has started its FY2023 on good footing, reporting strong Q1 results, with year-on-year growth in sales that highlight the success of its competitive value offering. The group recorded like-for-like (l-f-ls) sales growth of 12.3%, up from 3.4% in Q1 FY2022, bringing sales for Q1 to €22.1bn. This was driven by an especially strong performance in Latin America, where l-f-ls were up 26.0%.
"However, high food inflation continues to impact consumers in all of its key markets and pressure on consumer wallets from a higher cost of living has led to more consumers trading down from other mid-market players as well as its customers swapping to its private label products to save money.
"As such, own brand ranges were particularly popular at Carrefour in Q1, accounting for 35% of sales. With high inflation persisting into Q2 in most of Carrefour's key markets, the retailer is wise to remain focused on expanding the availability of its private label ranges as consumers’ purchasing power will remain limited throughout 2023."
Read More: Top 10 Supermarket Retail Chains In France
News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.