Carrefour SA

PAR:CA

Earnings Call Transcript 2020-Q3

[Operator]

Ladies and gentlemen, welcome to the Carrefour Analyst Conference Call. I'll now hand over to Mr. Alexandre Bompard, Chairman and Chief Executive Officer. Sir, please go ahead.

[Alexandre Bompard, Chairman & CEO]

Good morning to all of you. Thank you for being with us today. I hope you are well and safe. I would like to personally convey 3 key messages before we answer your questions. The first is that we are standing strong in an unprecedented situation. As the COVID-19 crisis continues, we are maintaining an extreme level of vigilance in 3 respects on the health situation in all our countries and our responses to it by public authorities. The first wave is continuing in Latin America while the second wave exiting Europe. In recent weeks, confinement has been extended in Argentina and partially reinstated in Spain, and curfew has been introduced in most regions of France, Italy, Belgium, while new restrictions have been adopted in Poland. We are preparing for the possibility of further restrictive measures being announced in the near future. Second, on the safety of our teams and our customers. We have put in place an entire arsenal of sanitary measures since the start of the crisis, and we have them regularly audited to ensure that they are fully respected. Our countries have also initiated a certification process of the health measures against COVID-19 by independent third parties. To date, this process is progressing well in France and Spain. Brazil and Romania have already been certified. This is clear recognition of the quality of the work done on a daily basis on the shop floor. Third, on our operations, we have a crisis management playbook with responses to each stage of the crisis. We ensure short decision-making processes, we circulate best practices, we reinforce our logistics plan to support the food supply chain, and we create new and dedicated services for customers. On all this, we have a key role to play, and we are up to this challenge, thanks to the exceptional commitment of our teams. They continue to be fully invested in customer service. My second message is that we are performing extremely well in this crisis. Our sales grew by 8.4% this quarter. We have not only recorded our best performance in 20 years, we have also outperformed our peers in many areas and geographies. This crisis makes the market more buoyant overall, notably because of a shift away from consumption outside of home to consumption at home. We benefit from this situation, although it varies from country to country. But the crisis did not suddenly make us more efficient. If we are moving as fast as we are and faster than competitors, it's because our strategy is right and appeals to customers. That's the result of the attractive commercial model we have built for them. Our model relies on 5 priorities. First, competitive prices in most of our countries and the best prices in the market in Brazil and Spain, notably. Second, an assortment that meets customer expectations. Our own brand is growing steadily in ourselves, and we are reinforcing our leadership in organic products as we outperform the market and continue to expand. Third, first-rate and fast-growing digital offering. By investing heavily in online, we have added an omnichannel dimension to our multi-format offer. Our infrastructure and expertise allow us to accelerate. Our annual growth in food e-commerce exceeded 30% for the first 2 years, and it has more than doubled in recent months, with an increase of plus 65% this quarter. Looking at the future, we have further enriched our network of partners and put in place logistics to dominate the home delivery market, a promising market where we already are the leader in France. But it's not just about e-commerce. Everywhere in our group, our digital transformation has knocked down wall within our businesses. We bring more and more digital to our stores, to our front, middle and back offices. We are more data-centric, and we develop new users for our customers. Fourth, leadership on the food transition for all. The crisis has brought us fully into a world where a customer wants to regain control of their diet to preserve their health and the planet. The food transition provides an answer to this. That's why I wanted Carrefour to embody it. That's why we continue to take many initiatives that are visible to customers. Lastly, the factor that underlies all the rest, the energy that we put into quality of execution on customer satisfaction. These are the top 5 priorities I have set for all country CEOs, starting with the recently appointed ones, and a very positive dynamic is underway. Customer satisfaction measured by the NPS is up 4 points since the end of June and 15 points since the start of the plan. These feeds our sales grow in a remarkable way. My third and final message is that we have strong momentum and solid positions in our key geographies. If I focus on our 3 key countries representing 70% of our global sales, we have 2 growth engines that are running at full speed. In the huge Brazilian market, we are already the leader, and we are widening the gap with the competition. We have very powerful formats. We are the price leader in each of them. Our sales growth this quarter is absolutely record-breaking, with plus 26% like-for-like growth. Both Carrefour Retail and Atacadão are performing extremely well, and our hypermarkets are growing 2x faster than the market. In Spain, we achieved a rapid turnaround. We now have a competitive model and very high-quality execution, which illustrates what we are doing in other European countries. As a result, we posted plus 6.3% like-for-like growth this quarter. Our third engine is in France. Building on the decisive reforms carried out over the last 2 years, France has now entered a phase of renewed growth. Rami Baitieh is leading this new France with energy and speed. He's shaking up our entire organization on streamlining our processes with an obsession in mind, better operate, better serve the customer. France is already reacting very well to his management and method as evidenced in our latest figures. Our NPS has increased by plus 7 points since the end of June, thanks to good progress made in all our formats, and our performance versus competitors is solid. We posted plus 3.8% like-for-like growth in sales, including a clear acceleration in our hypermarkets. In addition to our operations in our geographies, we added another source of growth through bolt-on M&A. We have a real ability to play our funds and strengthen our positions in the market in which we operate, as evidence, Brazil, Taiwan and more recently in Spain. This additional growth is enabled by the strict financial discipline and strong balance sheet that has become second nature for our group. So where does Carrefour stand today? Our performance is visible to all. All the objectives of the Carrefour 2022 plan are either confirmed or enhanced. The speed of our transformation and its success places in a very favorable position. Of course, we operate in a difficult economic environment on our services, notably financial services, and sales to professionals in Europe are facing some headwinds. But in a year, that presents many challenges and many uncertainties. We are delivering strong structural growth in our retail activities, both in sales and profitability. We look to the future of our group with confidence. And as the crisis continues, we remain focused on the safety of our teams and clients. Thank you very much for your attention. Matthieu Malige and I are now happy to take your questions.

[Operator]

[Operator Instructions] We have 1 first question from Mr. Arnaud Joly from Societe Generale.

[Arnaud Joly, Equity Analyst]

Yes. I have 3 questions. The first one, regarding the 555 rolled out in France, how long should it take to have the right implementation? So how long to reach the point where you want to be? The second question, on France as well. You have just launched the top project in France. What impact do you expect in terms of level of inventories, number of employees in France, of customers and the reduction in product shortages?And the last question, if you can make any comments regarding the level of consensus for 2020. According to FactSet, it stands at EUR 2.089 billion.

[Alexandre Bompard, Chairman & CEO]

Perhaps I start with the first question and after top -- on the level of consensus. So you're right. We have been deploying in France with much energy since the arrival of Rami Baitieh the 555 method. We have, of course, experienced and developed and implemented this methods in many other geographies for 1.5 years. And today, all our geographies have been working on this method, focused on customer satisfaction. In France, since July, this method is implemented with great energy by the new team. As you probably see in the release, the effects of the 555 method are strong in terms of NPS. It improved by 7 points since July with an increase in all formats, especially hypermarkets. This is, of course, a clear first confirmation of the relevance of this method, but also a clear sign that there is a very positive attitude, understanding and behavior of our teams towards these new methods. We see improvements on most criteria on the -- notably product and promotion availability, the idea that the price is the right price, helpfulness of the teams, waiting time in the cashier. So all these key elements for the customers improved very steadily. So it's a very good sign that our customers understand what we are doing for them, understand that the whole organization from the store, the back office, the headquarters are completely focused on this customer satisfaction. And so no reason why it wouldn't continue on the contrary. And we develop these methods. We implement them everywhere. And we are highly confident about the fact that it would continue to contribute to the improvement of our NPS, which is, as you know, a key element of our performance.

[Matthieu Malige, Chief Financial Officer]

On the top project, Arnaud, so you're right. The top project is really about structuring the work in the stores with dedicating -- dedicated teams working both in-store replenishment and contact with the customers, another team working in the reserved and making sure that the flow of products and the level of inventory is right, and the third team dedicated to making sure that the data, both in terms of our replenishment system and also in terms of price security, is right. The objective of that, we follow them very closely. We have nothing specific to share at the moment. But clearly, we think that we have -- we can have a better flow of products, reduced inventory, probably an increase in productivity, reduced shortages, probably better accuracy of our prices and more contact with the customers. So all that goes into the direction of a better customer satisfaction and a better efficiency of our operations. Concerning your third question, as usual, I will not point to a specific number. But to elaborate, of course, the environment is uncertain and evolving rapidly with the pandemic and the associated sanitary measures on the macro environment. But as of today, current market expectations for recurring operating income seem fair. We observe different trends for 2020 ROE. Given the very solid commercial model we have built in retail and the successful [ workout ] of actions founded on customer satisfaction, we expect profitability to be actually better than expected in the purely retail business. However, in parallel, some of our activities are penalized by the environment, notably on the financial services, on the other services like Promocash. But as of today, current market expectation for ROE seem fair.

[Operator]

Next question is from Mr. Xavier Le Mené from Bank of America Securities.

[Xavier Le Mené]

Two for me, if you may. First, in France and Brazil, actually. You saw a strong performance in nonfood sales, of course, in a very specific environment. But does it change actually the view you have on nonfood and the hypermarket? So that would be the first question. And linked to that, do you see more opportunity for the use of the extra space in the big stores and potentially, can you share your thoughts?

[Alexandre Bompard, Chairman & CEO]

Thank you for your question. On the nonfood, you -- we have been very pragmatic this year, as you know. We did think that there was a clear opportunity for us to fulfill customer expectations and needs. We have been working for 2 years. It was a discrete work. It was not possible for you to realize the magnitude of the work that has been done to leverage our international sales, to massify our volumes, to work on the sourcing to be able to be more attractive for our customers. So we have done this work in the last 2 years. And first, on all categories, we are far better than we were before, commercially speaking. We are more attractive. Brazil has done a stunning job to restore attractiveness on the nonfood. And in the other European countries and the rest of our geographies, we have been working to improve all the categories of nonfood on which we were not so relevant commercially. That's the first one. The second is that during the crisis, of course, we have understood, because there was this idea of one-stop shopping that was interesting that we should be very concentrated on the quality of the operations. We maintain a high-quality of investments in order to be capable to grasp the opportunities of -- on the commercial opportunities. So I would say it doesn't change globally the vision that we have about nonfood. We have never said that nonfood was not necessary. We know that we need a strong nonfood to fuel all our hypermarkets. But as you know, at the beginning of the plan, we did decide that on a certain number of subcategories, we were not relevant, and we stopped a certain number of noncategories. But on the other categories, we are relevant. We have improved a lot our operations. We have improved a lot in terms of commercial attractiveness. And during this crisis, we have decided to be commercially very dynamic in order to grasp all the opportunities. On the square meter reduction, as you know, we have a clear objective. It remains relevant that some stores are too big and can be efficiently compacted. However, this year, as you clearly understand, we wanted to be absolutely pragmatic, and some projects have been delayed due to the COVID context. There are many things to do in the stores, as you can imagine, at different stages of the crisis in all our geographies. And the key priorities was not at all to create new things to do for our teams that need -- that we want them to be absolutely focused on the operations and the preservation of themselves and the customers. There are many, many things to do to improve our e-commerce capabilities and drive and so on. So that was not the key priorities of this year, but we confirm in the midterm our objectives.

[Operator]

Next question is from Mr. Andrew Porteous from HSBC.

[Andrew Ian Porteous, Analyst, European Retail]

Yes. Can you just talk about -- you referenced sort of price investments in the third quarter in some of the fresh categories there. Could you just talk about the competitive environment you're seeing in France and whether you think you're improving your price position relative to some of your competitors and what the outlook is like there? And then, I mean, you've just talked a lot about nonfood. But could you just give us an idea on which categories in particular are performing well? And what sort of momentum within the business generally and particularly within nonfood gives you? What sort of thoughts it gives you around peak trading and whether you're seeing customers starting to think about Christmas purchases already?

[Alexandre Bompard, Chairman & CEO]

On the prices first, I would say that the environment remains, of course, very competitive. As you know, it has been for 4 years. It continues to be. There has been probably a little more price reinvestment by some independent retailers. But nothing very significant. Nobody is acting in an irrational way, sacrificing margin and bringing the whole market down. That's not the situation. That's competition. Some players invest a little more, some are -- don't react. We don't belong to the second category. As you know, for the last 3 years, thanks to the huge amount of economies that we have been capable to deliver, we have taken many initiatives in all the markets, in all our geographies, and probably you've seen in the press release that we've [ seen ] the main one for the quarter. In France, since 2018, we have invested first in the supermarket because you know that our belief was that there was room for improvement in supermarkets. We have continued that this year. In hypermarkets, we have begun to invest beginning of 2019 on unbeatable prices, on committed prices. In September, we invest on fruit and vegetables. So we continue to invest, we take some initiatives. The new team is also thinking to new mechanism in order to be more attractive for our customers. So we have the capability to invest. We have the level of cost savings to fuel that. And we continue to be part of this competition, but there's no irrationality in the market. On the nonfood, I would say that all our main categories has worked positively. You've seen our data for the quarter, they are very strong. We have good results in the majority of our nonfood categories, particularly with the categories related to home, to home office, on which we have been good. We have improved a lot on textile because we did think 2 years ago that we have a role to play on textile. We have a good offer, thanks to TEX. Great job has been done by the team. You know that this level of textile could play a role, and that's why we have decided to invest on the collection, on the positioning related to our values on environment and so on. So we are satisfied by the performance on all our key categories, more domestic appliances. [ It's tied for the summer ]. And all categories related to home, all these categories work positively.

[Operator]

Next question is from Madam Maria-Laura Adurno from Morgan Stanley.

[Maria-Laura R Adurno]

I actually have just 2 questions. The first one is around the guidance that you provided and the comments that you made around the other services and B2B activities in Europe. Just wondering if you could provide some level of context, which country it is in. Any context could actually be helpful for us to then quantify the magnitude of this as part of the overall group. So that would be my first question. Second question, coming back to some of the comments you made around the NPS score and the fact that it was driven by hypermarkets. Any incremental comments that you can make would be helpful.

[Alexandre Bompard, Chairman & CEO]

Maria-Laura, so on your first question relating to other services, I think it's very consistent with what we disclosed in H1. We said that we would have -- we had some decrease of recurring operating income on the financial services. The reason for that was that we had a decrease in the net banking income following lower issuance of cards and the lower use of the cards and also the fact that we had tightened the condition for granting credit. And we also reflected the increase of the cost of risk. We see these trends continuing in H2. So that -- and that's pretty much across our 3 main geographies in financial services. Then in terms of other activities, so they include B2B like Promocash. So it's obviously a segment of the business that we expect to be still slow in H2. So that should impact our profitability. The same applies to our merchant services, including travel agencies and ticketing. I think you can understand very well that these businesses are quite slow consequently and pretty much the same dynamic as we had in H1, but we see that dynamic continuing in H2.

[Matthieu Malige, Chief Financial Officer]

Concerning your question on NPS. As you know, it's, today, the key priorities of all our CEOs on all the management team. We have programmed -- dedicated programs in all the geography. We have this objective of reaching plus 23 points in group NPS by 2022. I can assure you that it is an ambitious objective. It's not easy to reach this level of improvement. The first 6 months of [ the year ], I see these figures never move. So it's really the results of a clear commitment of all the teams towards this objective. In this quarter, the NPS group has improved by 4 points after plus 3 points in the first 6 months. All the geographies contribute to that, and all the formats contribute to that to try to give you any further elements. Of course, it's impossible to improve an NPS by this level without having a clear increase in hypermarket. And of course, the hypermarket is the key priority of all the group CEOs in terms of improving the NPS because we know that we have so many things to do, so many potential, so many [ marche du manoir ] in order to improve that. And we clearly see from Argentina to Belgium, including Poland, that when we manage to do that, we have a strong [indiscernible] the customer satisfaction. But it's also the case for digital. We start from a very low point. We always have told that in terms of the quality of service on digital 2 years ago. The team in all the countries have done a tremendous job to build the omnichannel capabilities, but also to improve the quality of the operations. We see, including during the crisis that was so difficult for our e-commerce capabilities, that the NPS is continuing to improve in the digital. Of course, on that, we are not at the level where I want us to be. We start from a low point. But including in the NPL, in the digital, including with this developing, increasing of volumes, we are capable today to track all the elements that we have to increase, to improve, in order to improve the customer satisfaction and link to the improvement of the customer satisfaction, create -- reduce the churn, create more intimacy with our customers. And that's a job that has been done in all our formats, in all our geographies today.

[Operator]

Next question is from Mr. Nick Coulter from Citi.

[Nick Coulter, Director]

Congratulations on the record growth. A couple from me, please, if I may. Firstly, coming back to French nonfood, it'd be helpful to understand to what extent the growth is sustainable or specific to the environment and also to try and marry that up to the kind of the reduction in space, the targets that you have for hypermarkets over the next couple of years. It certainly looks like there's a way to go with respect to those. And then also with respect to France again, on your operating leverage comments, should we expect you to balance the operating leverage with investments in the offer? Or should we expect some to flow through for this year?

[Matthieu Malige, Chief Financial Officer]

On the first question, I can answer the second time, but I think the question has been already posed. But just to try to continue to elaborate a little a bit more. We have created, I think, the condition since 2 years to have sustainable, more attractive offers on the main categories on nonfood. We have been working hard on our offers, on our sourcing, on our capabilities that was absolutely [ inexistent ] to leverage our size, to propose some volumes, to create an event around our main products. We were unable to do that. So we have worked very strongly, and we have improved our own performance. And improving our own performance, we have been creating the conditions for a more sustainable performance in nonfood.

[Nick Coulter, Director]

But then you reduced space? Surely, it will impact like-for-like. So that's -- well, I'm trying to square your comments on sustainable nonfood with the intention to...

[Alexandre Bompard, Chairman & CEO]

Yes. Yes. The first part of your question was nonfood. So that's the situation. It doesn't mean, of course, that considering the crisis, we have an additional potential because we know that the capability to offer a one-stop shopping experience increases the attractiveness of our nonfood offers. But to answer your question, we have a more sustainable nonfood offer on a certain number of categories. Concerning the nonfood, the reduction of square meters, as I told you, we are well engaged in this process of reducing the stores that are too big that need to be compacted. It affects mainly the nonfood -- certain number of nonfood categories. We have suppressed a certain number of nonfood subcategories, like, for example, we were not relevant on jewelry on domestic -- big domestic appliances. We have reduced them or suppressed them because we don't think that we have a particular role on these categories. And of course, we wouldn't come back on that. But during this crisis, on the level of reduction on the square meters, I'm sure you would understand that the key priority from March to June and today with the sanitary measures, with the crisis, with all that our team have to do was not to continue to reduce that at the same level because I want to be very pragmatic. I want the team to be very focused on the commercial operations, and they have many things to do. And that's why I told you that some projects have been delayed due to the COVID context. And of course, it was the good measures. It has no sense this year to make big changes in our hypermarkets while our hypermarkets are [ in tension ] with all what we have to do. So the line is the same. We think that a certain number of non-categories, we are not relevant in this subcategory. We would continue, and it would probably only affect the level of square meter reduction. But for the last quarter on this year, we have been concentrated on the operations.

[Matthieu Malige, Chief Financial Officer]

On your second question, Nick, relating to the evolution of the recurring operating income by geography, well, I think you get it quite clear in our communication that we feel that there are -- well, we have 3 main geographies, and that's really 2 of them, namely Brazil and Spain, have reached winning position. And so we expect these to contribute to -- I mean robust growth in terms of recurring operating income. As far as France is concerned, you see that the momentum is growing, is improving. There are clearly very positive signs both on the customer side and on the market share side. It's -- we still have to invest more. We're still in a catch-up mode in France, but clearly going very fast. And so we will keep nurturing that renewed commercial momentum. It's a growth plan, and France needs to get to the same position as the other geographies in Spain and Brazil.

[Operator]

Next question is from Madam Fabienne Caron from Kepler Cheuvreux.

[Fabienne Caron, Head of Food Retail Sector]

Three questions from me. First one, on online. Clearly, it's a focus for investors. Could you share with us for your key markets, Spain and France, because we've got Brazil, the growth of online in this quarter and what's the weight in percentage of sales? This would be the first question. The second, for top in France. It looks as if the price is suggested that by April 2021, 70% of your French hypermarket should be under the top model. Could you confirm? Because it looks like if -- when a hypermarket moves to top, it gives an extra boost in terms of like-for-like. So I think it will be very useful. And the last question, a more general one for you, Alexandre. It looks as if in France as well, older people or older customers are leaving the hypermarkets. I'm not shopping there anymore. Could you give us your thoughts on that, please?

[Alexandre Bompard, Chairman & CEO]

I'm not sure to have understood the last question. Can you repeat?

[Fabienne Caron, Head of Food Retail Sector]

The last one is that when we look at the customer base of the hypermarket, it looks like the French hypermarkets are suffering because the share of their customers, the above 50s and 60s, are the customers that are not shopping in the hypermarket anymore, which has a negative impact for this segment as a whole.

[Alexandre Bompard, Chairman & CEO]

Okay. Thank you, Fabienne. I think the first, you're right. This quarter, like the beginning of the year, has been a clear confirmation of the acceleration of the e-commerce. I remember we have the discussion with some of you after the semester, on some of you, and I understood the question, were asking, do you think that it is a sustainable acceleration? I did think that it was a sustainable acceleration. And it is the case. So we have continued to accelerate; we have increased the distribution capacity during the quarter; we have continued to deploy a network of drives; we have built new partnerships for accelerating delivery: Uber Eats in France, Foodpanda in Taiwan, Glovo, Bringo; we have continued to open new in-store preparation areas on accelerated warehouses' mechanization; and we have continued to work on new services. All that enabled us to continue to accelerate in all our geographies. I think it's 200% for Brazil, it's 45% for France, and it's 160%, I think, for Spain. So you see this pace of growth is strong. We clearly managed to create the conditions to be leader in a certain number of geographies. We are leader in France on the home delivery market. You remember, we were under 10% 3 years ago. We are now with 25%, 27% the leader, which is a great achievement. So we will continue to work on that to develop capabilities, to improve our operations. And we do think that we are on the good world to be a strong multichannel leader. Your last question is such an interesting question. And I think we would need much time to discuss about that because it's a key subject. What we see since the beginning of the plan, and we have been working very strong on that because you're right, the danger for hypermarkets, such as in our industry. I used to work in radio 10 years ago, and I remember each year, our auditors has [ one or more ] and it was a very worrying question. And so 3 years ago, we decided to work on how can we be able to attract families? How can we be able to restore a younger generation coming in our hypermarket and being part of our omnichannel model? And so we have been working on the loyalty programs, we have been working on creating this omnichannel reality, the fact to use all our formats from the proximity [ tilted otherwise ], including the pedestrian drive, in order to attract new categories of customers. I wouldn't say today because you know that too much that it's a winning game. But we see positive signs, including young families coming back, and we see clearly that a certain number of our new customers that have entered [ facts ] to the digital. You know we have been capable to record 1 million of new customers begin to be part of our omnichannel model and go to the hypermarket. So we have been working on that. It's a long-term journey, I'm aware of that. It's something we are facing that, and we don't pursue this reality. It's a reality, but we have good positive signs.

[Fabienne Caron, Head of Food Retail Sector]

Okay. But is a gain on families enough to offset the older people that are leaving the hypermarket format?

[Matthieu Malige, Chief Financial Officer]

I think the whole strategy, Fabienne, is indeed to attract these families with -- also playing the multi-format approach, so we can address them at any time they want to shop. I think the investments we make on private label, on organic products, on cheaper prices, on more services, I think that targets clearly the families. So as Alexandre said, it's something to monitor as time passes. But we're very aware of that, and we have a number of actions to address the families. On your other question on the top rollout timing, Fabienne, well, we -- it's the first phases of rollout. You understand that speed is clearly part of the DNA of this team, so we'll try to roll it out as fast as we can. We think it can have very positive effects in a very high number of domains, as I said to Arnaud earlier. So we'll keep you posted on the developments. No clear objective has been shared today.

[Operator]

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

[Carole Gladys Madjo, Research Analyst]

Yes. Just a couple of questions from me, please. So to come back on France, I guess, the country is expected to have more severe restrictions and maybe a lockdown going forward. So what kind of measures are you taking, notably in hypermarkets, in order to mitigate this potential negative impact? Second question, again, sorry, going back on nonfood. Can you remind us how many flat Darty and shopping shops you have currently in the Carrefour stores? And maybe give us some updates on these initiatives. Is it still ongoing? Or has it been delayed, as you mentioned earlier, because of the COVID?

[Alexandre Bompard, Chairman & CEO]

Thank you. Today -- as of today, and I would say, as of now, no one can say exactly what the sanitary measures would be decided, what would be the scale, the intensity, the length of these measures. But of course, we have been working since December -- September on different scenario. We know that [ unsure ] business continuity and planning for it is one of our duties. We -- throughout the crisis, we have managed to very quickly adapt to unforeseen circumstances and keep our activities up and running. The situation is rapidly evolving, you're right, these days, especially in Europe, especially in France. We have a crisis management playbook with responses to each stage of this crisis and to the different scenarios and to the different measures. It notably includes adapted governance with quick decision-making processes, best practice that we have learned, sharing across countries, launch of new dedicated services for customers, notably elderly people and medical staff. Of course, increase of our e-commerce capabilities. Since this summer, we have not stopped to increase the e-commerce capabilities in order to be ready for an hypothetic new rush. Reinforcements of logistics plans to support the food supply chain, and of course, measures of protections of our teams, of our customers. I've spoken about the audit, about the certification, and that's our key priority. So we are fully ready to the different scenarios in all our countries. And Carrefour has managed to continue ensuring its duty as a provider of food for the population. Despite the situation, we are ready for the new moments in which we enter with much experience, with a good level of preparations, with a good level of anticipation, with a good level of best practices that we have learned from this -- from the crisis. On the second one, we have 2 stores with Darty. As you probably remember, there has been a decision from the antitrust authority. We continue to develop these 2 stores. We learned a certain number of interesting things on that. But you probably understand that it's not our key priority for the moment to develop new stores.

[Matthieu Malige, Chief Financial Officer]

I think we have time for 2 more questions.

[Operator]

Next question is from Mr. Nicolas Champ from Barclays.

[Nicolas Champ, Director]

Yes. I just wanted to come back on the performance in Q3. Could you please elaborate a little bit more regarding the performance during the quarter? Have you seen a quite linear performance or an acceleration? Maybe as [indiscernible] slowdown, I mean, based on the performance of [indiscernible]. My question [indiscernible].The second question is about [Audio Gap]to give us more color regarding the start of Q4 performance in October, especially in France, but also in other countries. Do you see that continuation of solid third quarter trend?

[Matthieu Malige, Chief Financial Officer]

Thank you, Nicolas. The line was pretty bad, but I think I got pretty much your questions. First one, I think, is on the base throughout the -- I mean in Q3. Well, I think we've had solid trends in all geographies and through the quarter. I think our markets have benefited from the out-of-home to home consumption switch. So it's a steady movement. And then I think that our performance and relative overperformance versus competitors has also been quite steady through the quarters. We have, in some geographies, which were -- or some formats, which were particularly exposed to tourism. We have seen a weaker August, I would say. But once the peak touristic season was finished, we got back to the previous trend. So that's the dynamic then for Q4, nothing very specific in October, and then we need to see. It's obviously too early to talk about Q4.

[Operator]

Next question is from Mr. Sreedhar Mahamkali from UBS.

[Sreedhar Mahamkali]

Yes. Two quick ones, please. First one, can I come back to nonretail activities and the impact from those? In the first half, I think we've had EUR 70 million impact in France, out of which about EUR 25 million was from the bank. I think we had another EUR 20 million to EUR 25 million in Spain also from the bank. Just for clarity, are you suggesting that level of magnitude still sounds about right to think about for the second half, please? And specifically, have you taken any further provisions in bank in either France or Spain in Q3? I'm sure we'll know in Brazil in a few weeks anyway. So that's the first question. And second one, briefly, are you able to talk about channel performance format by format in Italy? To give a little bit more color there, that would be helpful.

[Alexandre Bompard, Chairman & CEO]

Thank you, Sreedhar. Well, obviously, it's too early to comment very specifically on H2 and full year performance in the financial services. But -- so we'll see. We're working on that ahead of our full year closing. I think that, again, we had several aspects in H1. And I think in terms of dynamics, I expect them to be still present in H2. That includes a pressure on the net banking income. As you know, we had a decrease in [ crop ] production during the lockdown. We've also seen a decrease in the use of the card, notably the [ of health ] spendings, and we had shorter-term loans. We've also [ tightened ], and that has continued in H2 the conditions for granting credit. And in terms of cost of risk, the IFRS 9 accounting standards provide that once a year we fully update our model. There has been, obviously -- so that also provides, sorry, forward-looking approach. So we'll have to reflect for the current sanitary and economic situation. I'm not worried about the quality of the portfolio. The profile that we see today is very consistent with what we saw in previous crisis. But there will be some technical effect as part of the IFRS 9 accounting in H2. And so that's for the financial services, and I think this trend applies to most geographies.

[Matthieu Malige, Chief Financial Officer]

On your second question, you're right, under the commercial performance in Italy in Q3, disappointing. We have suffered from our exposure to tourist areas where traffic has slowed down significantly December. We're indeed particularly present in cities such as Rome, Florence as well as in Lombardy and Tuscany regions. In addition, the prices exacerbates our lag in customer satisfaction. It's the only country like that, but in Italy, it is the case. That's why we [ had ] to appoint Christophe Rabatel who started on September 1. He's a young manager, more than 15 years' experience at Carrefour, very complementary position. He has a successful track record and is upset, like many of our managers today, by the customer priorities, by the customer satisfaction, by the NPS methods. He's aware on -- that his role is to change the customer centricity and to improve the operational excellence. He will build on the foundations led by Gerard Lavinay with the objective to improve commercial momentum in Italy, where there's room for improvement. We are absolutely aware of that. And that's the word I'd given when he was nominated.

[Alexandre Bompard, Chairman & CEO]

Thank you very much for this discussion. Keep safe. Talk to you very, very soon. Thank you very much.

[Operator]

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