(Adds details on Brazil, Spain, Italy, updates shares)
By Dominique Vidalon
PARIS, April 15 (Reuters) - Brazil and southern Europe drove first quarter sales growth at Carrefour as its turnaround strategy gained traction, and the world’s second-biggest retailer said it was comfortable with market expectations of higher full year profits.
Shares were up 5 percent at 26.37 euros by 1329 GMT as Spain’s improving economy boosted the French grocer while price cuts and store revamps boosted Italian sales, Chief Financial Officer Pierre-Jean Sivignon said in a trading update.
Same-store sales in Brazil, Carrefour’s second largest market after home base France, rose 9.9 percent in the quarter.
Carrefour has better weathered recession in Brazil than French peer Casino or U.S. rival Wal-Mart as it sells mostly food which is less vulnerable to reduced consumer spending.
It also controls Atacadao, Brazil’s largest cash-and-carry store operator, which Jefferies analysts said in a note was “the perfect positioning for a stressed Brazilian consumer”.
Carrefour outperformed its European sector, which was up 0.12 percent, and was the top gainer on the CAC-40 index of French blue chips which fell 0.37 percent.
“Reassuring trading update,” said Exane BNP Paribas analysts, adding that remarks made by Sivignon on the profit outlook were “encouraging at this early stage in the year”.
Sivignon told reporters that market estimates for full-year 2016 earnings before interest and tax (EBIT) of around 2.5 billion euros were reasonable at this stage, implying a 2 percent rise on last year’s 2.45 billion euros.
He also cautioned it was early in the year and that currencies were very volatile.
Trading conditions remained tough in China, where sales were down 8.4 percent in the quarter, compared to a 15 percent drop in the fourth quarter of 2015.
Carrefour is restructuring its China operations, expanding e-commerce and convenience stores and opening logistics centres to cut costs and focus more on fresh products. It expects the plan to impact its China results by late 2016-early 2017.
Europe’s largest retailer said first-quarter sales were 20.05 billion euros ($22.58 billion), in line with the average of analysts’ estimates of 20.04 billion euros according to a ThomsonReuters poll.
Stripping out the impact of lower oil prices on its fuel sales, as well as exchange rate moves, the underlying revenue increase was 3.2 percent on a year ago, up from the 2.4 percent pace of growth in the fourth quarter of last year.
Last month Carrefour said it would renovate and open more stores to keep its European turnaround on track but said it would take time to revive its loss-making Chinese business.
Carrefour pioneered hypermarkets but has seen customers shift to local and online shopping. In response the company, which generates some three quarters of its sales in Europe, has cut prices and costs, accelerated an expansion into convenience stores, revamped its stores and given managers greater autonomy. ($1 = 0.8880 euros) (Editing by Jon Boyle)