July 13, 2017 / 6:49 AM / 8 months ago

UPDATE 2-Retailer Casino confident on profit goals after French sales growth

* Casino shares rise sharply

* Keeps full-year profit growth targets

* Improvement at Geant hypermarkets, Monoprix strong

* Eyes 20 pct rise in H1 group operating profit (Adds CFO comments, analyst, shares)

By Dominique Vidalon

PARIS, July 13 (Reuters) - French retailer Casino said its full-year profit goals were achievable after strong performances by its Monoprix and Geant stores helped it beat second-quarter sales expectations.

The group, whose credit rating was cut to junk by Standard & Poor’s in March 2016, is under pressure to show it can revive profits in France while conditions in Brazil, its second biggest market, have been tough after a deep recession.

Chief Financial Officer Antoine Giscard d’Estaing told analysts that group operating profit should rise 20 percent in the first half alone, after Casino reported second-quarter group sales of 9.277 billion euros ($10.6 billion).

That was above analysts’ average forecast of 9.173 billion euros in a company-compiled consensus and helped by further signs of recovery in Brazil, where sales jumped nearly 10 percent. The company reports first-half earnings on July 27.

“We are well in line with our full year objectives and we will improve our profitability in France as expected,” Giscard d’Estaing said, as shares in Casino rose 4 percent to 54.45 euros.

Excluding acquisitions, currency effects and revenue on fuel, sales rose 3.3 percent against 3.1 percent growth in the first quarter.

French rival Carrefour also reported stronger-than-expected second-quarter sales last week while flagging a persistently challenging environment in France where price cuts helped its hypermarkets division return to growth.

Casino, which has been criticised by U.S. activist fund Muddy Waters for being too short term and too leveraged, said it still aimed to grow operating profit at its food retail operations in France by 15 percent this year.

It reiterated its prediction for growth of at least 10 percent in group operating profit at current exchange rates, having achieved a 3.7 percent rise in 2016.

“This performance clearly underpins profit guidance, where the risk increasingly looks to the upside,” said JP Morgan Cazenove analysts in a note, keeping an “overweight” rating.

In France, Casino has cut prices at Geant hypermarkets and reduced retail space for non-food items in response to competition from online and smaller convenience stores, while it has also increased its focus on organic and fresh food products.

Giscard d’Estaing said Casino considered the price positioning of all its store banners in France as “solid”, compared to its main rivals.

Same-store sales at the Geant hypermarkets in France rose 0.4 percent in the quarter, driven by a 4 percent increase in food sales. This compared with a 1.9 percent sales decline in the first quarter of 2017.

Monoprix sales alone rose 3.6 percent in the quarter, helped by a new loyalty card, robust textile sales and a rise in delivery services proposed to store clients.

Casino, which controls Brazil’s top retailer Grupo Pao de Acucar, said food retail sales in Brazil rose 9.9 percent from 9.8 percent in the first quarter, despite slowing inflation, reflecting a recovery at the Extra hypermarkets and strong growth at the Assai stores.

$1 = 0.8739 euros Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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