Auchan sacrifices its profitability to relaunch its French subsidiary
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In 2022, Auchan aims to “drawing a line under nine years of declining turnover” in France, where 52% of its activity is carried out there. This is the desire expressed by the distribution group, during the presentation of its half-year results, Tuesday, August 30. A goal carried by a new management team in France, appointed at the beginning of the year.
But, for now, the results are still down. At 7.9 billion euros in the first half, turnover in France fell by 2% on a like-for-like basis, while it rose by 3.4% in the rest of the group. Driven by fuel sales, the global entity Auchan Retail recorded a 6.2% increase in its turnover during the first six months of the year, to 15.4 billion euros.
In France, especially, operating profit (Ebitda) fell by 74% over the half-year. In a context of relaunch of its French subsidiary, Auchan sacrificed its margins so as not to pass on all the price increases it granted to its suppliers, in order to win back customers. No anti-inflation marketing operation in preparation like other distributors, but a pricing policy intended to guide consumers towards certain products. “We are increasing prices less on the Auchan brands, which we want to highlight”, said Ludovic Delcloy, financial director of Auchan Retail. For comparable items, the price increase reflected in receipts would thus only be 4% over one year, at the end of June. A figure to be taken with caution, according to Mr. Delcloy, because “the share of comparable items has dropped, so it’s complicated”.
“First positive signs”
From this recovery policy, the group nevertheless perceives “first positive signs on France”assures Mr. Delcloy, as shown by the improvement in revenues, quarter after quarter, since the end of 2021. “balance in summer”, but also “a 6% increase in store traffic, especially in hypermarkets, and an increasing customer satisfaction index”.
In stores, the first changes in consumer behavior in the face of inflation are beginning to appear, with a “decline in the number of items purchased and an evolution in the products. We are making progress on our sales of entry-level products”continues the financial director.
Across the group, the semester was also heckled. Since the start of the conflict in Ukraine on February 24, Auchan has continued to operate some forty stores in the country (three have closed, two of which were damaged). And he is the head, in Russia, of 230 stores, which work “in total autonomy in compliance with the rules of the European embargo”says Mr. Delcloy.
A widening of losses
The group does not detail its results by country, but its sales in Central and Eastern Europe (Hungary, Poland, Romania, Ukraine, Russia) increased by 5% on a like-for-like basis. In Russia, after a first quarter “which went well”, where customers mainly bought to store, sales fell in the second quarter, to reveal, during the summer, the first difficulties resulting from the economic crisis. The departure of brands (Ikea, H&M, Zara, etc.) from its shopping centers in Russia also penalized footfall in its stores in the second quarter.
At the level of the ELO holding company, which oversees the distribution activities (Auchan Retail) and the real estate activities (Ceetrus, Nhood), these developments and the impairment of assets led to a widening of net losses to 191 million euros in the first semester, against 24 million a year earlier.
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