French supermarket chain Casino sees pandemic costs eat into profits
French supermarket chain Casino reported a jump in revenue in the second quarter due to a surge in stockpiling triggered by coronavirus lockdown, but extra costs related to the pandemic ate into profits.
Operating profit fell 15.3 per cent to €386m (£348.34m) in the first six months of the year as extra staff bonuses, in-store protective measures and logistics added to one-off costs.
The grocer reported an underlying loss of €87m, compared to a €12m profit last year.
Net revenue fell 7.5 per cent to €7.85bn in the first half of the year due to currency swings and a drop in fuel sales.
However, in the second quarter sales jumped 10.4 per cent on a same-store basis driven by demand in France and Brazil during coronavirus lockdowns.
City centre convenience stores performed particularly well during lockdown restrictions as shoppers sought local suppliers. The group said it would open more local stores.
“There was a very substantial shift from eating out to eating at home,” Casino finance chief David Lubek said, according to Reuters.
“Things are reverting back to normal but there are still much higher average baskets.”
Jefferies analysts said in a note that Casino’s performance was underwhelming, as margins in France declined and its debt level crept up despite a push to shed non-core businesses.
The company has offloaded €2.8bn of assets, including hundreds of Leader Price stores to Aldi, and said it was targeting more sales to reach its €4.5bn goal.