PARIS--Supermarket chain Carrefour said shoppers in France, its biggest market, were resilient so far to the impact of the Iran war, with CEO Alexandre Bompard adding that he expects the conflict to cause less of a spike in inflation than Russia's invasion of Ukraine four years ago.
"It's a very different outlook," Bompard said on a first-quarter earnings call with analysts. "It's an inflationary environment which should not trigger a significant change in consumer behaviour."
Carrefour's profit margins narrowed to 2.6% last year from 3.1% in 2021, partly as a result of French shoppers switching to cheaper rival E Leclerc as inflation surged. Now the multinational retailer faces higher costs across its markets as the Iran war has driven energy prices up sharply, a shock that could feed through into higher food prices.
But Bompard said France should only see a "marginal uptick" in inflation, pointing to the finance ministry's estimate last week of 1.9% average inflation this year, up from 1.3% expected previously.
For the first quarter, Carrefour reported a 0.8% decline in comparable sales in Brazil as high interest rates hit consumers' spending power, while like-for-like sales in France grew 1.4%, an improvement from the end of last year. "We have kept seeing, in Q1, growth in volume and also in value (in France)," Bompard said, adding that Carrefour gained market share during the quarter.
Strong growth in Spain, where sales rose 3.1%, helped compensate somewhat for the Brazilian business.
Carrefour chief financial officer Matthieu Malige said the retailer saw no change in consumers' behaviour in March, the first month of the Iran war. Carrefour operates in the Middle East through franchise partner Majid Al Futtaim, and Malige said all stores in the region were open and there were currently no supply or inventory issues.
Shares in the 12-billion-euro company have risen 18% since the start of the year as investors welcomed Bompard's plan to focus on core markets France, Spain and Brazil, and grew more hopeful the retailer can become more competitive.
