Carrefour SA

PAR:CA

Earnings Call Transcript 2019-Q3

[Operator]

Ladies and gentlemen, welcome to the Carrefour's Conference Call. I'll now hand over to Mr. Matthieu Malige. Sir, please go ahead.

[Matthieu Malige, Chief Financial Officer]

Thank you. Good evening to all of you and welcome to our 2019 third quarter sales call. You have, no doubt, seen the press release we issued after market closed. You will also find a presentation on our corporate website. Let me first highlight the key messages of our presentation today. First, Carrefour posted another quarter of like-for-like sales growth. In Q3, group's like-for-like sales grew by 2.3% like-for-like driven by a return to growth in Spain and continued strong momentum in Latin America, with the best like-for-like sales growth in 5 years at Carrefour Retail in Brazil. Sales in France slightly decreased by 0.9% like-for-like, reflecting a high comparable base, price investments and reduced promotional intensity, especially in the hypermarkets. And food e-commerce sales grew above 30%. Second, we maintained a determined pace of execution of the Carrefour 2022 plan in Q3 with a few initiatives I would like to highlight. A structured program to act on customer feedback and improve their satisfaction is being rolled out, using net promoter score as the key indicator. The price and nonprice competitiveness have been further improved. The price promotion loyalty equation is progressively being revamped with the reduction of promotions in favor of investments in loyalty and Every Day Low Price. The Carrefour branded product offer has been expanded with the launch of 300 new products in the quarter. They're also better showcased on store shelves and marketing materials. Now before we go in greater detail into the Q3 numbers, let me share a few thoughts. The initiatives that have been implemented over the past few quarters, complemented by further advances in Q3, are progressively changing Carrefour's positioning and commercial proposition. Let me provide a few examples. Consumers increasingly want to trust the food they eat and those who sell it to them. Carrefour's clear positioning as the leader of the food transition for all and concrete actions under the Act for Food program make Carrefour a clear reference for organic products and healthy and responsible food shopping. Customer satisfaction has been defined as a key priority. Concrete actions are implemented in all stores in response to customer feedback. NPS ratings are showing clear signs of improvements in geographies, such as Poland, Argentina and Spain. Price investments have been implemented in all geographies with a focus on loyalty programs and a Every Day Low Price, all the while, reducing promotional intensity. In France, since the beginning of the year, we launched the Primes Fidélité and the Unbeatable prices. Price investments are increasingly noticed by customers. Investments in digital and e-commerce have been strong. They enable Carrefour to outperform the market in most geographies, notably in France, Spain and Brazil. Carrefour's continued expansion in growth formats such as cash & carry and convenience densifies our store network and admitting with commercial success. All of this progress is gradually making its way through to our numbers, as reflected in the good Q3 performance of key business units, including Spain, Brazil, supermarkets and convenience in France as well as our activities in Poland, Argentina, Taiwan and Romania. It also shows in our strategic priorities with organic posting growth above 25% in Q3, e-commerce growth above 30% in Q3, Carrefour-branded products with sales penetration up 2 points in France in 1 year, and cash & carry and convenience, which are posting solid like-for-like trends. Customers are reacting well to our strategy. While these are positive signs, we also know we have a lot more to do to be where we want to be. Along with this commercial transformation, Carrefour's economic model is well under control and the cost savings dynamic is strong. This gives us resources to invest further. We also benefit from a solid balance sheet, which has been recently reinforced by asset sales. As you see, the transformation momentum is strong and concrete signs of favorable customer reaction are more and more visible. This solid momentum and the first results reinforce our confidence in our strategy. As you saw in our press release, we reaffirm our ambition and confirm all the targets of the Carrefour 2022 plan. After this overview, let's now look at -- take a look in detail at our Q3 numbers. Total Q3 sales reached EUR 20.2 billion, up 1.5% at constant exchange rate. Note that the quarter was impacted by an unfavorable currency impact of minus 0.8%. On a like-for-like basis, sales rose 2.3%. This performance has been achieved in competitive markets and in complex macroeconomic environment in a number of our geographies. Let's now take a look at our Q3 sales performance by geography, starting with France. In a weaker market, that remains very competitive, Q3 sales in Carrefour domestic markets were down minus 0.9% on a like-for-like basis with stable food sales, while nonfood sales were down 6.7%. There are a number of factors that are worth highlighting. First of all, we were cycling over a strong comparable base as Q3 last year benefited from a very high promotional intensity and also good market conditions, the football World Cup and unusually hot weather conditions. Then a number of commercial investments were carried out and are reflected in our Q3 numbers in supers and hypers, including the 500 Unbeatable prices, which were launched in June, a reduction of promotional intensity, the development of Carrefour-branded products with a 2-point increase in sales penetration, and the reduction of underproductive nonfood sales area and discontinuation of some categories like jewelry. These commercial investments have a short-term mechanical negative impact on reported sales, but they lay the foundations of a sustainable and profitable growth model. In this context, hypers were down minus 3.6% like-for-like. It is worth noting that part of the impact from reduced promotion is one-off as Q3 last year was exceptionally promotional. We estimate this one-off impact at approximately minus 1.5%. Supermarkets and convenience showed good momentum. Supermarkets posted solid like-for-like growth of plus 1.5% over a strong comparable base. Convenience and other formats also grew 2.2% on an already strong comparable base. Expansion continued with the opening of 47 convenience stores during the quarter. France also posted very strong growth in organic sales and food e-commerce. Turning now to Europe. Sales in the region were up 0.5 -- 0.4% like-for-like. This represents another sequential improvement and the best like-for-like growth since the launch of the Carrefour 2022 plan. The main highlight of the period is the return to growth in Spain, a key country for Carrefour, where recent initiatives are clearly bearing fruits. Like-for-like sales grew 1.5% in Spain. Customer satisfaction is at the heart of the transformation with FX starting to show e-commercial performance. Carrefour recorded almost 700,000 additional tickets in the period. This dynamic is strong across formats, including in food e-commerce, which posted solid growth in Q3. In Italy, sales were down minus 2.3% like-for-like. Carrefour posted a resilient performance versus Q2 in a market that remains competitive and is decreasing, particularly in the north of the country where Carrefour is present. The strategic plan presented in February is progressing well with the strong price repositioning and cost reduction initiatives. In Belgium, sales were down 2.8% like-for-like. Carrefour was penalized by a difficult and declining market on a comparable base that was supported last year by the World Cup and the heat waves. The group accelerated food transition initiatives with good results in organic, local and Carrefour-branded products. In Poland, like-for-like reached a record 6.2%, confirming the relevance of the commercial model and of initiatives geared to customer satisfaction. Romania showed another quarter of like-for-like growth of 2.8%. Latin America remains a growth engine for Carrefour. Sales in the region were up by a strong 12.8%. In Brazil, Q3 sales were up 8.4% at constant exchange rates. Like-for-like sales grew by 3.8% in a context of a marked slowdown in food inflation. With 8.8% like-for-like growth, Carrefour Retail recorded its best quarter in the past 5 years. This notably reflects successful price initiatives in hypermarkets, strong momentum at convenience stores as well as solid growth in both nonfood and e-commerce. Atacadão’s Q3 sales were up 9% at constant exchange rates, of which 6.9% contribution from openings. Atacadão opened 12 new stores since the beginning of the year. Like-for-like growth remained robust at 1.8% but was impacted by the sharp slowdown in inflation on agricultural commodities. Financial services were supported by the operation to waive the monthly card fee for all its users. The increase in billings was plus 30.6% in Q3, representing record growth. In Argentina, sales were up plus 58% like-for-like, with growing traffic and volumes. Carrefour took advantage of its reference positioning in price competitiveness to gain more customers in a quarter marked by political and macro instability. Let me now conclude this geographic overview with Taiwan, which posted another quarter of like-for-like sales growth at plus 2.3%. In conclusion, our performance in the third quarter showed a step up in the Carrefour 2022 transformation plan with a strong focus on customers. 2019 is a year of deepening of our transformation initiatives to build a sustainable and profitable growth model. Our Q3 performance and transformation momentum confirm the relevance of the Carrefour 2022 plan and show further progress. We confirm all our objectives and have already achieved one of them, the target of disposing of nonstrategic real estate assets of EUR 500 million has been reached 1 year ahead of plan. Thank you for your attention, and we're now ready to take your questions.

[Operator]

[Operator Instructions] We have one -- first question from Mr. Arnaud Joly from Societe Generale.

[Arnaud Joly, Equity Analyst]

Matthieu and team, I have 4 questions. The first one on French hypermarkets. Can you share some indicators that shows that we could have growing satisfaction in French hypermarkets in terms of NPS or traffic? My second question is what feedback could you provide on your new concepts for French hypermarkets, particularly the [ atmosphere ] concept? The third question, still on French hypermarkets, when you reduce the space dedicated to nonfood, do you have an idea of the potential negative impact on food sales? And the last one, on the level of consensus for 2019, I have a group EBITDA for EUR 2.053 billion. I'm just wondering if you're comfortable with this level.

[Matthieu Malige, Chief Financial Officer]

Thank you, Arnaud. On the hypers, your first question relates to satisfaction and NPS and traffic. Well, we're not disclosing any specific number. I think it's complex. I tried in my speech to give you data to have a good reading. We have, I think, a quite specific quarter with very high historical promotional intensity last year and this year, a number of initiatives, which have mechanical negative impact on reported sales. So I think it's hard to read anything specific on traffic. As far as the net promoter score, there's a number of initiatives, notably on price, which are quite recent. You remember that the Primes Fidélité and the Unbeatable prices were launched just before December. So it takes time for them to materialize. But we have a number of successes, which show that the initiatives are working well. That includes the organic products with the Bio Experience notably, and we're reporting sales growth on these items. We're also communicating on private labels, which are increasing in terms of sales penetration. They’re growing 4x faster than the market at Carrefour. And then you have the prominent indicators about the satisfaction. I know that a number of you are looking at that. In terms of profile, clearly, a change in mix with promotional savvy customers, which came less during the quarter as a reduction of the promotional intensity and more traffic from families and more regular type of customers. On your second question, relating to the feedback on innovations. Indeed, a high number of innovations, you mentioned Avignon, there are also innovations in Dijon, in Flins-sur-Seine. We have Supeco models, and we have a number of initiatives on our online offering. I'm not going to share any specific elements. It's very competitive. The only thing I can tell you is that we're learning a lot. It's a test-and-learn approach. I know these trials, there are interesting feedbacks, which may be interesting for themselves, but which also give us opportunities to roll out a part of the initiatives in the entire store network.Your third question, you asked me whether the reduction of nonfood space had an impact on the food sales. It's hard to measure. It probably does, but we're not sharing anything specific there. On your last question relating to the consensus, and obviously, I won't comment on a specific number. I think there are 2 things to have in mind: the first one is that markets are challenging and clearly, the environment over this Q3 is volatile. But despite this context, Carrefour is progressing very well on its transformation, and the business dynamics since the beginning of the -- and including in Q3, are good. It seems that these elements are currently well understood by the market. And so it appears that today's market expectation for the full year recurring operating income are consistent with the current trend of the business. I think that's what we can say on consensus tonight.

[Operator]

Next question is from Mr. Nicolas Champ from Barclays.

[Nicolas Champ, Director]

I have actually 3. The first one is could you give us a little bit of inflation in the third quarter in France, especially in the context of the new retail law implemented at the beginning of the year. The second one is could you give us maybe some color regarding your trading performance since the beginning of Q4, especially with regards to its anniversary campaign that started at the end of September. That could be interesting to us, some kind of exit rate for your performance in France and especially, at your French hypermarket. And the last one is, could you update us on the performance of the 2 Darty shop-in stores you are testing in 2 hypermarkets since almost 1 year now? That's I think probably enough to draw some conclusions regarding the performance of this test. And did you take a -- you make a decision to roll out these shop-in stores in other, like, for French hypermarkets.

[Matthieu Malige, Chief Financial Officer]

Thank you, Nicolas. So first on food inflation. There is probably a lot of public data available. My feeling is that there is no big change in food inflation since the beginning of the year. We're probably around 1% or slightly below 1% in Q3. So no big change in food inflation. And no impact from the new law in France, on inflation. I don't think there's anything material to report. On your second question relating to the Q4, let me highlight that the -- I think the Q3 performance was very particular notably due to this strong historicals and higher promotional intensity. This is clearly less impactful on other quarters and that includes Q4. So I think we'd have a more favorable comparison base with a lower promotional -- I mean, relative promotional intensity in Q4 2018. And we will also have the yellow vest movement as a comparison basis. On your third question relating to the Darty shop-in-shops, you're right. We have 2 shop-in-shops that we are testing. Interesting things, we tested them in the first instance, then we adjusted a little bit the concept based on customer feedback. Again, customer feedback is really driving our decisions in the store, including on these shop-in-shop. We're thinking of what can be the future of this shop-in-shop. Clearly, no decision has been taken yet, so nothing to share. But we keep working on these 2 shop-in-shops.

[Operator]

Next question is from Mrs. Carole Madjo from Exane BNP Paribas.

[Carole Gladys Madjo, Research Analyst]

A few questions for me. Coming back on consumers’ feedback. Can you maybe give us some more detail on the price perception that you're seeing, notably in France and the French hypermarket stores? Then secondly, coming back on the loyalty program, can you maybe provide some data on the customers using the loyalty card? So basically, how many registered clients do you have? How much more did you spend compared to clients, who are not using the card? What about the shopping frequency? Any data would be quite useful to see how beneficial it is for you. And then maybe another question, in terms of your online pricing strategy. So according to some data, such as the Duvet Index for instance, you're currently raising your prices online in order to make them in line with the off-line offer, and this process is reported to be expected to be completed next summer. So can you confirm that this is actually your strategy? And if so, why should it take so long to be implemented?

[Matthieu Malige, Chief Financial Officer]

Thank you, Carole. So let me, maybe, start with your last one, taking them in reverse orders. So online pricing, it's true that we're aligning or drive prices with e-store prices. Please keep in mind that at the same time we're doing that, we're reducing our store prices with the Unbeatable prices and a number of other investments. So it's converging, but at a lower level. It is gradual. It takes time to implement it as, again, it is accompanied by changes in the stores. I think there is a number of reasons for that. I think it's more consistent for the customers. And the level of service has substantially improved on the Drive and more generally, on the e-commerce experience. You see that materializing in our sales number. So there's clearly more and more reasons to come and shop at Carrefour Drive and more generally at Carrefour online. On your second question relating to the loyalty program. Yes, it's very interesting. So I'm sure you're aware. But it's very -- it's a key part of our omnichannel strategy and a key part of the revamping of the commercial equation that I touched upon in my introduction word. The Primes Fidélité, a multi-format and omnichannel. The first results, they are very encouraging. We're ahead of our expectations in terms of subscriptions, in terms of traffic and in terms of baskets, so very satisfied there. In terms of behavior, we also noticed that the customers who enter the program tend to increase their frequency of shopping at Carrefour. It's still the beginning because it's really ramping up and the CRM teams are also learning a lot from the CRM marketing campaigns that they are doing in order to develop frequency and omnichannel behavior. That's also an objective of this loyalty program. Coming back on price and the price perception in France. Again, it's -- I think I would make different angles. The first one is, there has been, in 2018, investments in the supermarkets. You may remember that we consider that there was an emergency to restore price competitiveness in the supermarkets. We think that the price perception is -- now it's 18 months and that has been complemented with the flexibility on the Unbeatable prices. So this is starting to have a momentum. And I pointed to you that the like-for-like in Q3 in the supermarket was satisfactory and notably given the higher comparison base. But keep in mind, it's not just about the price, it's also a holistic movement to gain traffic and customer satisfaction. As far as the hypers are concerned, the investments are more recent in France. In other geographies, they were done earlier. So I think it's a little early, they're just a few months old now, these investments, to see any clear sign, I think, the signs that we see is more the first dilutive mechanical effect of decreasing prices, lowering promotions and having more customers switching to Carrefour-branded products.

[Carole Gladys Madjo, Research Analyst]

Okay. Understand. And should we expect more price investments in the hypermarkets going forward? Or are you happy with what you have done so far?

[Matthieu Malige, Chief Financial Officer]

Well, we -- as I said in my speech, generally, we have made incredible progress. The teams have been fantastic in rolling out the Carrefour 2022 first initiative through all geographies and stores. Clearly, we're not where we want to be, and I think that includes pricing. But again, it's a holistic approach. The good news is that we have solid cost savings dynamics and that dynamic has been ongoing also in Q3. So that gives us resources to be able to further invest in price and nonprice competitiveness initiatives.

[Operator]

Next question is from Mr. Bruno Monteyne from Bernstein.

[Bruno Monteyne, Senior Analyst]

A few for me please. You very clearly stressed in the press release and in your slides that the balance sheet is an important asset in your fast-changing industry, if I quote you word for word. Now that seems a little bit like seriously hinting at potential M&A and obviously, we're, therefore, thinking about the Casino buying assets or buying Casino. Could you please explain a bit more why you need a very strong balance sheet? And how you're planning to use it as an important asset? That's my first question. My second question is around Atacadão and like-for-like of 1.9%. Now you've had a lot of new stores in the last few years. And if we were to look at mature stores, the stores more than 3 years old, surely, like-for-like must be a lot lower because you get a lot of boost with those set of stores in year 2 and year 3. I would say, of estimates close to 0% like-for-like, which would be very negative volumes, can you comment on the volume like-for-like in Atacadão? And if it's really a sign that we're beyond the peak of cash & carry in Brazil? My third question is on pedestrian Drives. I mean you've implemented many, many. Is it -- does it bring a material contribution to the business of the pedestrian Drives? Or is most of the growth really coming from Drives? And last, but not least, you talked that you're comfortable with the guidance, to one of the previous questions. But am I right to assume that's before the IAS 29 adjustments for Argentina? Or would that include any material negative from hyperinflation?

[Matthieu Malige, Chief Financial Officer]

Thank you, Bruno. So on the balance sheet, we indeed think, and I think we've been stating that probably for the last 2 years, that having a strong balance sheet is a key asset. This industry is transforming very fast at the moment. And we are in a volatile, uncertain, political and macroeconomic environment. So in order to implement and conclude the transformation with serenity and medium-term perspective, we think, it is particular important asset at this point in time. This has been reinforced with proceeds from divestment of China and Cargo assets. We've done some few M&As. You saw the Ewally acquisition in Brazil. So if you're aware, we have specific assets, we could be an acquirer there. I think we did in the past, and that could be the case. I think we're really talking here about bolt-on and specific M&A on specific competences or geographies. On your second question relating to Atacadão, well, I think you're going a little far. I think there is a slowdown in inflation. I think this inflation is particularly strong in Q3 and in farming and basic commodities. So that has an impact. Our stores are still progressing well. Clearly, there are areas where there is more competition and more local players opening, but we're also opening in catchment areas of other competitors. So we're very satisfied with the performance of the format. We are committed to opening 20 stores, and so we keep pushing on Atacadão stores. We think it's really a winning format. On pedestrian Drive, I think, it's a very interesting initiative. Commercially speaking, actually, I was visiting one last week. You offer city center customers access with very high service to the prices of the hypermarket inside the city center. The level of satisfaction on this pedestrian Drive is very high. So we're very satisfied with this. As you know, we have standard only pedestrian Drives, and we also have pedestrian Drives inside existing stores. That's also another way to have traffic and more traffic into our stores and have new customers. Clearly, this service also is a way to recruit new customers. You have these new customers discover our stores. So we have 136. We have a clear leader in Paris and in some other cities, and we will keep rolling these out. Can you remind me your fourth question, Bruno?

[Bruno Monteyne, Senior Analyst]

You said you were comfortable with the consensus EBIT or recurring operating income, but I presume that is before the IAS 29, the hyperinflation impact on Argentina, which looks like it might turn negative again. That's probably before that, is that correct?

[Matthieu Malige, Chief Financial Officer]

Well, I think everyone makes their own analysis and their own assumption. I think there is a consensus and that is what I was referring to.

[Bruno Monteyne, Senior Analyst]

But if you're comfortable with that consensus of the internal expectation having before or after IAS 29?

[Matthieu Malige, Chief Financial Officer]

Again, I think each analyst makes their own estimate. And I'm not making any specific forecast on how the IAS 29 norm will turn at the end of the year. I think we both clearly understood the current situation in Argentina with the elections that are upcoming. So that's -- so nothing specific on IAS 29.

[Operator]

Next question is from Mr. Andrew Porteous from HSBC.

[Andrew Ian Porteous, Analyst, European Retail]

A few for me as well, if I could too. Firstly, on Spain, obviously, a better performance there with 1.5% like-for-like. Could you put a bit of context around that? I mean is that a market on easing? Or is that the market getting a bit better there? Yes, just, sort of, what you see in your business in Spain that's giving you a bit of encouragement? The second question was around NPS. I mean you've rolled this out across your business. Could you give us any early indications of your learnings from NPS and what areas of your offer customers are looking for you to perhaps do a little bit better? And then the last one was, you made an interesting comment around price investments being increasingly noticed by customers. I'm just wondering whether you're sort of alluding to the fact that you're seeing a better volume response in some of the price investments that you've been making. Is that the case? And also linked to that, have you seen any response from your competitors in response to your price investments?

[Matthieu Malige, Chief Financial Officer]

Thank you, Andrew, for your questions. On your first question relating to Spain, well, I think, a number of these interesting new initiatives to share. The first one is that the focus and the energy on customer satisfaction is very strong. With customer feedback being monitored very closely and corrective actions when a customer may have a complaint, are corrected very, very quickly. So that I think is new. There are also, I mean, other initiatives. So strong energy. I think I commented that when commenting Q2, I think, the end of Q2 already saw a strong energy, very happy to see that materialize a very full -- a full quarter. In terms of other initiatives, I think, I've touched upon that on my speech. I think the digital and a little bit of food e-commerce is progressing well there. The Carrefour-branded products, you may remember that, I think, we shared that some time ago. The range is also increasing there. The visibility of the products, the quality of the products is also improving. And the same applies to fresh, and we know it's a very important area of our business. So very consistent with the Carrefour 2022 plan, interesting initiatives and positive response. On the -- on your second question relating to the NPS, what are the learnings? Well, the learnings is that it's a fantastic tool to embark the teams, motivate them, engage them into the daily operations in the stores and the daily initiatives. It's also a way to create direct contact with your customers. And so this is why we're putting that forward in our communication. It is very key in all the KPIs that we follow. I have, as part of my bonus, the NPS of the group, so all top managers and then more manager and store manager level are all incentivized on the NPS. And what is interesting and, I think, I've touched upon Poland, Argentina and Spain, is that progressing on NPS has a link with the overall sales. On your third question, which was, what's the response to price investments? And do we see volume response? I think it really depends on geographies. I tried to share this idea in my speech. I think we have a number of geographies, which are probably more advanced into the transformation. They may also have started less behind the back than other business units. I think Argentina is very interesting with net substantial price investments there, and we have clear volume and positive volume response. I also touched upon Brazil and to be the hypermarkets where we did some price investments last year and that's also interesting. I think we also have interesting things in Eastern Europe. And then you have other business units, which are probably less mature where price investments are more recent and where it's probably too early to see specific reactions yet.

[Operator]

Next question is for Mr. Maxime Mallet from Deutsche Bank.

[Maxime Mallet, Research Analyst]

I have 4 actually. The first one is with regards to NPS. You mentioned that it's too early in France to actually see a move with regard to the NPS after the initiatives you've taken. Well, then what about supers. You mentioned last year that you had to start earlier the investment on this format given that that's where you saw an urgency. Can you maybe comment about how the NPS has reacted to the investments you've made? How long it took for the NPS to move, if it did, after the investments you have made? The second one is with regards to, well, the comments you have made about the consensus and you're expecting that you can achieve the consensus for this year. Is it fair to assume that you might have potentially a bit more contribution, notably from the cost savings? Thanks to the Système U or the Tesco partnership ramping up and also some cost savings in Italy that supposedly are going to be more contributive to H2 than it did to H1. You had something between EUR 400 million EUR 500 million of cost savings per semester since last year, additional one. So could it be a bit more than that in H2 2019? My third one is with regards to the surface reduction that you've mentioned. Could you maybe just give us a speed with regards to how much of those space reduction was in France versus outside of France? And my last one is with regard to food versus nonfood. You've given us a figure with regards to France, thanks for that. Could you maybe give this figure for specifically hypers?

[Matthieu Malige, Chief Financial Officer]

Thank you, Maxime. On your first question relating to NPS. Again, I really want to stress this idea that it's really a holistic transformation that's taking place, which includes revisiting the assortments, which includes the right level of service for the customers, which includes also the highs, which includes the assortments and notably the Carrefour-branded products, whereas, on top of expanding the range, we're working on the quality. So I think all that takes time to be implemented. Although, it's going very fast. It takes time to make a whole. I'm not saying we are there. I am saying we are making a very good progress and that we've had and you're asking about the French supers, we've had an interesting and I think positive for the third quarter. On your second question, relating to the speed of the cost savings. I think that these dynamics have now been ongoing for 2 years. It's a profound dynamic that we have. That dynamic has kept developing in Q3, as planned. Again, it's a -- it is a -- there is some kind of momentum in these dynamics. So nothing specific to report there. And you are relating that to the consensus, and I was I think saying to the previous question that the current level is consistent with the current trend of the business, which includes the current trend of the cost savings. Then on surface reduction, we're giving it at group level, that's our commitment. We're not disclosing that on the French level. And can you repeat again your fourth question, Maxime, please?

[Maxime Mallet, Research Analyst]

Sure. It was with regard to the like-for-like speed that you've given for France with regard to food versus nonfood. I was wondering whether you could give us this figure specifically for the French hypers.

[Matthieu Malige, Chief Financial Officer]

Well, you have it for France. I think it's already something, I think, we started sharing a few quarters ago. Well, you know that most of the nonfood offering is in the hypermarkets. So you can probably extrapolate that.

[Maxime Mallet, Research Analyst]

Okay. understood. And to make sure I did understand it correctly. So basically you didn't saw an NPS improvement in supers, in France yet?

[Matthieu Malige, Chief Financial Officer]

No. I didn't say that. I'm not commenting specifically on the NPS in the supers yet. I am just sharing that there's a number of initiatives, which were taken and I think, now they are making signs that are perceived by customers and, again, it's a holistic approach.I think we have one last question.

[Operator]

The next question is from Mr. Rob Joyce from Goldman Sachs.

[Robert Joyce, Equity Analyst]

Three for me. First of all, clearly, lots of initiatives going on in the French hypermarkets and some of the comparison period impacting this quarter. But if I sort of road -- 2-year stack forward over the next 3 quarters, is it sensible to probably -- to think the French hypermarkets will be negative like-for-like over the next 3 quarters? Is that a sensible assumption? Second one is just wondering, if you comment a little bit -- I think, in your release you say that in Italy, the market is decreasing. Does that mean the food market is actually down? I think that would be in volume terms given inflation still looks to be positive? And the third one is just on the asset disposals. I wonder if you could confirm the cash you got in from the China sale. And what sorts of rent you will be incurring on the Cargo Property Assets sale to Argan?

[Matthieu Malige, Chief Financial Officer]

So on the French hypers, I think -- so I'm going to give you a guidance for the upcoming 3 quarters. And I think I pointed to the specificities of this good third quarter with very strong historicals. And I think at least for Q4, we don't have such high comparison base. So probably a more normative historical base for this Q4. On Italy, the data we have is that it's negative, notably in the north of Italy. My comment was in value terms. So I -- to extrapolate what it could mean in terms of volume, but the data I have relates to value. In terms of China, so the deal has been closed. There are still postclosing adjustments, which are very standard based on the closing balance sheet. These works are currently ongoing. So it's a little premature to share any specific number with you at this stage. I think we already shared what was the value of the deal when we announced it. And it's probably, again, in our press release today. As far as Argan is concerned and the divestment of their Cargo properties, we are not sharing any specific on the range, but we sold that at very good conditions. We knew that the capitalization rate was quite attractive. I let you find the right benchmarks for where the market is today on logistics assets and we were in that range probably at the bottom end of this range.Thank you very much. Thank you all for attending this call and for your questions. Have a very nice evening. Bye-bye.

[Operator]

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.