Auchan reported first half (H1) 2014 results for the 26 weeks period ended 30 June 2014.
Group net sales increased 16.1% y-o-y to EUR 26.0 billion due to the 100% consolidation of Sun Art Retail’s results. On a like for like (LFL) basis sales decreased 0.6% y-o-y.
Hypermarket sales grew 16.1% to EUR 21.2 billion, mainly due to the integration of Sun Art. LFL sales decreased 0.6% y-o-y. Hypermarket sales in France decreased 2.6% y-o-y and 2.0% LFL due to a 2.3% average price decrease which on the other hand contributed to a 1.2% increase in traffic. The hypermarket division grew by 65 stores globally (57 acquired in Poland and 8 new openings) and 9 AuchanDrive stores in France.
Supermarket sales decreased 2.0% to EU 3.8 billion with LFL sales down 0.2% y-o-y. French supermarket LFL sales decreased 0.5% while Wester European (excluding France) supermarket LFL sales decreased 7.5% y-o-y. The division’s store base has decreased by a net of 8 stores, mainly in Western Europe while 30 proximity stores were integrated in the A2Pas network in Paris.
Auchan group’s other operations: online (Auchan.fr, Auchandirect, Grosbill), Chronodrive, Alinea and Little extra reports net sales up 3.6% y-o-y to 569 million. The retailer opened 8 new Chronodrive stores.
Immochan’s net sales grew 1.7% y-o-y to EUR 318 million.
Margins and Profits
The group’s EBITDA grew 4.7% y-o-y while the gross margin decreased 0.4% y-o-y to 22.6% of net sales, on account of heavy price investments in France as well as due to the integration of the Chinese operations.
Operating profit remained stable at EUR 561 million, while the recurring operating income decreased 13.0% y-o-y to EU 403 million.
Group net profit increased 12.8% y-o-y to EU 388 million, though excluding the consolidation of the Chinese operations net profit decreased 33.4% y-o-y and group net profit decreased 11.5% y-o-y to 272 million.
Auchan invested EUR 708 million in H1 2014 of which 29.2% in supporting its price repositioning strategy in France, 16.0%, 23.4% and 31.4% in improving the appeal of its stores in Western Europe, Central and Eastern Europe and Asia respectively. The investments were distributed between hypermarkets (57.0%), supermarkets (13.6%) and real-estate (24.7%).
Kantar Retail Point of View
Following the mixed results of 2013 the first half of 2014 depicts Auchan on a clearer path of recovery:
- Gaining sales momentum in France due to a focused price repositioning strategy, lowering gross margins, store refurbishments and staff reshuffling in stores as well as at top level.
- Consolidating its enlarged store portfolio resulted from the integration of Real and the consolidation of its Chinese operations as well as further streamlining its small-box formats in Western Europe and France.
- Further streamline underperforming operations, expand organically and capitalize on its real-estate expertise. Auchan is on course to divest properties worth EUR 600 million to 2015 while investment plans for the same period have a EUR 2.2 billion budget.