Auchan Retail FY2020 confirms ‘successful turnaround’

Date : 08 March 2021

Jon Wright

Head of Insight - RA EMEA

Auchan said in its 2020 financial year confirmed its ‘successful turnaround’ and the ‘success of the Renaissance operational excellence programme as it reported its EBITDA rose 27% to €1.63 bn. However, the improvement in its profitability came despite Auchan Retail’s revenue falling 5.2% to €31.626 bn, although it remained stable, contracting by only 0.2%, in like-for-like terms.

Flat revenue in 2020 on like-for-like basis…

Auchan Retail noted its 5.2% fall in sales was accentuated by the drop in fuel sales, which accounted for €1.0 bn of the decrease, while exchange rate effects accounted for a further €703m. During the year, Auchan reported COVID-19 ‘had a significant negative impact in Q2 and Q4 in several countries’, which were ‘offset by a good Q1 and a good October and December’. It said digital revenues ‘saw very strong growth across all channels’.

…With challenges in France…

Like-for-like sales in France were flat, at 0%, with its performance ‘strongly impacted by the fall in hypermarket revenue’. However, while the format was affected, the retailer noted 80% of the fall seen by its hypermarkets was ‘concentrated in just 19 hypermarkets (out of a total of 117)’.

The fall was offset by growth in its other formats, especially its digital channel, where revenues rose 32%, to account for 12% of its total revenue at the end of the year. Auchan said its ‘Drive’ format was the main driver of growth, enjoying sales growth of 33%. It also noted the trials it had undertaken during 2020, including click & collect points in its supermarkets and the addition of further Pedestrian Drives.

…And Central and Eastern Europe…

Auchan reported like-for-like sales fell by 3.4% in Central and Eastern Europe, dragged down by its operations in Russia. However, it enjoyed growth in Hungary, Poland and Ukraine.

…Offset by growth in Western Europe (excluding France) and its ‘other markets’

In Western Europe, outside its home market, Auchan reported like-for-like sales rose 3.8%, ‘due to strong sales momentum in all countries (Portugal, Spain, Luxembourg)’. Meanwhile in its other markets, Taiwan and Senegal, Auchan said like-for-like sales had risen by 2.0%.

EBITDA improvement driven by Renaissance programme…

Auchan generated an EBITDA of €1.633 bn, a 27% rise on 2019’s figure. It reported an EBITDA margin of 5.2% in 2020, versus 3.9% in 2019, aided by a fall in operating expenses. Auchan said it had made structural savings of €425m in 2020, which has led it to increase its savings target from €1.1 bn to €1.4 bn at the end of 2022.

…Putting it on stronger foundations for short term strategic investment…

The success of the Renaissance programme provides Auchan with continuity of strategy in the short to medium term, after several changes of direction in recent years. The programme will see it continue to ‘reengineer… the company’s entire value chain’. In 2021, the retailer will look to embed its digital growth, especially in France, where it will rollout its click and collect desks in further supermarkets and open a further 300 Pedestrian Drives, with 50 to be open in the first half of the year.

…Which will aim to create a new role for its hypermarkets

Across its operations, Auchan is aiming to evolve the role of its hypermarkets to enable them to become ‘a neighbourhood support platform’. This will see it open the spaces up as physical marketplaces for local producers and specialist food shop-in-shops. They will also become a part of the wider supply chain, manufacturing products, storing goods, and to prepare orders for all its connected contact points.