French Retailer Auchan Sees Profits Up In First Half, Despite Revenue Drop
Auchan Retail has said that it expects shopping activity in the second half of the year to depend on pandemic restrictions, although cost savings under its revival plan boosted profits in the first half.
Asked about speculation Auchan and French rival Carrefour could swap some assets, notably in Spain, Auchan Retail non-executive chairman Yves Claude said the Spanish grocery chain Alcampo "is not for sale".
The introduction in France this month of a health pass that customers have to show in shopping malls with a surface area of more than 20,000 square metres hit business at the start of the third quarter, it said.
Some 60% of the turnover generated by Auchan hypermarkets in France is located in shopping centres larger than 20,000 square meters.
Auchan Retail's earnings before interest, tax, depreciation and amortisation (EBITDA) rose 3.7% to €594 million ($698.60 million) in the first half.
Revenue fell 3.2% to €14.8 billion, which Auchan blamed mostly on health restrictions in France but also in Hungary, Poland, Portugal, Russia and Spain. On a like-for like basis revenue was down 2%.
In France, EBITDA at Auchan Retail grew 25% despite a like-for-like sales decline of 4.2% as the business was affected by a fall in hypermarket sales caused by the closure of shopping centres for several weeks during the pandemic.
The retailer also faces price pressure from the rivals such as Carrefour and Leclerc, and competition from online giant Amazon.
To cope with changing shopping habits, Auchan has been modernising its hypermarkets, accelerating its online expansion and focusing more on smaller convenience stores while improving operating efficiency and logistics.
It is targeting savings of €1.4 billion by end-2022 and has achieved savings of €777 million since launching the plan it names Renaissance in 2019. In the first half of 2021, savings reached €113 million.
Elo, formerly known as Auchan Holding, includes property business New Immo Holding and a 49.9% stake in Oney Bank.
The group confirmed its plan to sell assets worth €1.3 billion by end-2022 and said it would pay an exceptional dividend of €750 million during the second half of 2021.