By Helen Reid April 22 (Reuters) - Supermarket chain Carrefour reported weaker-than-expected first-quarter sales on Wednesday as its business in Brazil declined and France, its biggest market, grew
Carrefour CFO expects Iran war to have smaller inflationary impact than Ukraine
Carrefour's Financial Outlook Amid Global Conflicts
(In April 22 story, corrects headline and text to show it was CFO Matthieu Malige speaking on the analyst call, not CEO Alexandre Bompard)
By Helen Reid
Impact of Iran War on French Shoppers and Inflation
April 22 (Reuters) - Supermarket chain Carrefour said shoppers in France, its biggest market, were resilient so far to the impact of the Iran war, with Chief Financial Officer Matthieu Malige adding that he expects the conflict to cause less of a spike in inflation than Russia's invasion of Ukraine four years ago.
"It's a very different outlook," Malige said on a first-quarter earnings call with analysts. "It's an inflationary environment which should not trigger a significant change in consumer behaviour."
Profit Margins and Inflationary Pressures
Carrefour's profit margins narrowed to 2.6% last year from 3.1% in 2021, partly as a result of French shoppers switching to cheaper rival E Leclerc as inflation surged. Now the multinational retailer faces higher costs across its markets as the Iran war has driven energy prices up sharply, a shock that could feed through into higher food prices.
France Inflation Outlook
But Malige said France should only see a "marginal uptick" in inflation, pointing to the finance ministry's estimate last week of 1.9% average inflation this year, up from 1.3% expected previously.
Regional Sales Performance
Brazil and France Sales Trends
BRAZIL SALES FALL, FRANCE IMPROVES
For the first quarter, Carrefour reported a 0.8% decline in comparable sales in Brazil as high interest rates hit consumers' spending power, while like-for-like sales in France grew 1.4%, an improvement from the end of last year.
"We have kept seeing, in Q1, growth in volume and also in value (in France)," Malige said, adding that Carrefour gained market share during the quarter.
Performance in Other Markets
Strong growth in Spain, where sales rose 3.1%, helped compensate somewhat for the Brazilian business.
Malige said the retailer saw no change in consumers' behaviour in March, the first month of the Iran war.
Middle East Operations and Investor Sentiment
Middle East Store Operations
Carrefour operates in the Middle East through franchise partner Majid Al Futtaim, and Malige said all stores in the region were open and there were currently no supply or inventory issues.
Investor Response and Strategic Focus
Shares in the 12-billion-euro company have risen 18% since the start of the year as investors welcomed CEO Alexandre Bompard's plan to focus on core markets France, Spain and Brazil, and grew more hopeful the retailer can become more competitive.
Additional Information
($1 = 0.8535 euros)
(Reporting by Helen Reid; Editing by Kirsten Donovan)
