By Helen Reid and Dominique Vidalon
PARIS (Reuters) -Carrefour, Europe’s largest food retailer, reported weaker third-quarter sales growth due to price cuts in France and high interest rates hurting consumer demand in Brazil, but stuck to its financial targets for the year.
Group sales reached 22.6 billion euros ($26.36 billion) in the third quarter, up 2.1% from a year ago, a slowdown from 4.4% growth in the second quarter.
With France, Carrefour’s biggest market, in a political crisis, finance chief Matthieu Malige told reporters that grocery demand held up in September despite uncertainty over the government.
“At this stage we don’t see a weakening of consumer dynamics,” he said, adding that he would not “speculate” on how France’s political crisis might impact demand this quarter.
Carrefour’s comparable sales in France grew 0.7% in the third quarter year-on-year, slower than a 2.1% increase in the second quarter, a decline the retailer linked to price cuts at its recently acquired Cora stores.
Carrefour has been cutting prices broadly, planning to fund these with cost cuts of 1.2 billion euros this year which it said were going to plan. It said price cuts helped it gain market share in France and Spain.
In Brazil, Carrefour’s second-largest market, high interest rates have put pressure on household spending and caused cash-and-carry sales volumes to fall, Malige said.
Sales growth in Brazil slowed to 1.1% in the third quarter from 4.4% in the second quarter.
Carrefour is undergoing a strategic review launched in February. After Carrefour agreed to sell its Italy business in July, French daily La Lettre last month reported it was planning to sell its Poland assets next, but Malige told analysts on a call that he would not comment on “rumours”.
“It [the strategic review] concerns all parameters, including Poland and Argentina, that being said the review is underway and there is no specific comment that I can make,” he said.
($1 = 0.8575 euros)
(Reporting by Dominique Vidalon, Helen Reid; Edited by Benoit Van Overstraeten and Jane Merriman)
