PARIS (Reuters) – A pick-up in food buying activated by coronavirus lockdowns extended an earnings bounce at French grocery store group Casino in the second quarter, however extra expenses ate into profits, frustrating financiers.
A male wearing protective match and face mask waits in a line observing safe social distance to enter in a Gambling establishment supermarket in Nice, as a lockdown is imposed to slow the rate of the coronavirus disease (COVID-19) in France, April 14,2020 REUTERS/Eric Gaillard/Files
Shares in the debt-laden merchant fell 11%in early trading, after the group stated it could not supply an upgrade on its financial outlook. It had actually suspended its 2020 guidance previously this year.
Operating earnings was down 15.3%in the very first half of 2020 to 386 million euros ($45363 million), and the group said extra staff benefits and measures to safeguard staff members in stores had contributed to one-off expenses.
It posted a hidden loss of 87 million euros in the period, compared to a 12 million euro earnings a year previously.
Jefferies analysts said in a note that Casino’s performance was underwhelming, as margins in France decreased and its financial obligation level sneaked up despite a push to shed non-core companies.
The group has actually up until now sold 2.8 billion euros of assets, including a number of hundred Leader Cost shops to German competing Aldi, and stated it was dealing with more disposals to reach its 4.5 billion euro target, although it offered no information.
” Gambling establishment’s problem stays its financial obligation levels,” said Gregoire Laverne, a fund supervisor at Paris-based Apicil Property Management, which owns some Casino bonds. “It’s the most highly-leveraged group in the sector, and the macro-economic environment is not one that favours asset sales at the moment.”
Casino CEO and managing shareholder Jean-Charles Naouri has actually been seeking to alleviate debts – and those of moms and dad business Rallye, which was placed under protection from creditors in May2019
The business, which likewise controls Brazil’s Grupo Pao de Acucar, has taken advantage of strong demand in big markets such as France and Brazil, where lockdowns to combat the pandemic suggested restaurants closed and families spent more at supermarkets.
” There was an extremely substantial shift from eating in restaurants to eating at house,” Lubek informed reporters. “Things are reverting back to regular however there are still much higher average baskets.”
Everyday orders online stayed 50%greater than prior to the coronavirus lockdowns, the group said.
The seller, stated net profits came in at 7.85 billion euros ($ 9.23 billion) in the period, down 7.5%on a reported basis as currency swings took their toll and fuel sales fell.
But sales rose 10.4%in April-June, omitting these factors and on a same shop basis, spurred by strong need in France and Brazil during coronavirus lockdowns, developing on 6.4%growth in the very first quarter.
Casino’s corner store in cities benefited as buyers relied on regional suppliers, and the group, which likewise owns the Monoprix and Franprix brands, stated it would open more.
Its CDiscount consumer electronic devices company likewise reported greater revenues.
($ 1 = 0.8505 euros)
Reporting by Sarah White. Extra reporting by Sudip Kar-Gupta. Modifying by Carmel Crimmins, Jane Merriman and Barbara Lewis