Auchan sacrificed its profits to relaunch its French subsidiary

By 2022, Auchan aims to “draw a line under nine years of declining turnover” in France, where 52% of its activity is conducted there. This is the desire expressed by the distribution group, during the presentation of the half-year results, Tuesday, August 30. A goal brought by the new management team in France, appointed at the beginning of year.

However, for now, the results are still low. 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. Due to the sale of fuel, 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.

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In France, in particular, operating profit (Ebitda) fell by 74% in half a year. In the context of the relaunch of its French subsidiary, Auchan sacrificed its margins in order not to pass on all the price increases it gave to its suppliers, in order to win over customers. There is no anti-inflation marketing operation in preparation like other distributors, but a pricing policy intended to guide consumers to certain products. “We raise prices less than the Auchan brands, which we want to promote”, said Ludovic Delcloy, financial director of Auchan Retail. For similar items, the price increase passed on the receipts will be only 4% a year, at the end of June. A number to be taken with caution, according to Mr. Delcloy, because “Part of the same things fall, so it’s complicated”.

“First positive signs”

From this recovery policy, the group however understood “First positive signs in France”assured Mr. Delcloy, as shown by the growth of revenues, quarter-by-quarter, since the end of 2021. “summer balance”, but also “a 6% increase in store traffic, especially in hypermarkets, and an increase in the customer satisfaction index”.

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In stores, the first changes in consumer behavior in the face of inflation are beginning to appear, with a “a reduction in the number of items purchased and an evolution of products. We are improving our sales of entry-level products”continued the financial director.

Throughout the group, the semester was also nervous. Since the beginning of the conflict in Ukraine on February 24, Auchan has continued to operate about forty stores in the country (three closed, two of which were damaged). And he is the head, in Russia, of 230 stores, which work “total autonomy to comply with the rules of the European embargo”by Mr. Delcloy.

An expansion of losses

The group did 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 the first quarter “good thing happened”, where customers mainly bought to save, 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 punished the footfall of its stores in the second quarter.

At the level of the ELO holding company, which manages distribution activities (Auchan Retail) and real estate activities (Ceetrus, Nhood), these developments and the deterioration of assets led to a widening the net loss to 191 million euros in the first. semester, against 24 million last year.

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