By Dominique Vidalon

PARIS (Reuters) -Carrefour plans to buy back shares for the first time in a decade, showing confidence in its turnaround plan after a strong first quarter and sending shares in Europe’s biggest food retailer around 4% higher on Wednesday.

The French group, whose potential takeover by Canada’s Couche-Tard unravelled earlier this year following opposition from Paris, said it would buy back up to 500 million euros ($601 million) of shares this year.

“Our share buyback programme is yet another sign of our confidence in the future and our ability to generate cash, a confidence renewed by our very good commercial performance in France,” Chairman and Chief Executive Alexandre Bompard told analysts, as the company kept all its financial and operational targets under its ‘Carrefour 2022’ strategic plan.

At 0845 GMT, Carrefour shares were up 3.6% at 15.64 euros.

JP Morgan analysts said the buyback had “merits in the context of the recently announced accretive deal in Brazil and provides comfort on the shape of the business.”

Carrefour, which last month agreed to buy Brazil’s third-biggest food retailer Grupo BIG, confirmed a goal to seek 2.4 billion euros in cost savings on an annual basis by 2023 and annual net free cash flow above 1 billion euros from 2021.

Finance chief Matthieu Malige told analysts Carrefour had a strong balance sheet and further buybacks next year could not be ruled out. He added the cash flow goal was based on the assumption 2021 core earnings (EBITDA) would rise from 2020.

First quarter sales reached 18.56 billion euros, marking like-for-like growth of 4.2% and reflecting robust food sales in key markets of Brazil, France and Spain.

In France alone, sales growth was 3.5%, outperforming the market in hypermarkets, supermarkets, convenience and the Drive click and collect business.

“France made huge efforts to come back into the game. I am confident we can increase the satisfaction level,” Bompard said of the company’s goal to put customer satisfaction at the heart of its commercial initiatives.

By early April, with new coronavirus lockdown measures in place in France – although less strict than in previous lockdowns -,growth remained solid, including in hypermarkets.

Carrefour and food retailers worldwide have benefited in the pandemic as lockdowns have forced people to eat at home.

Carrefour is in the midst of a five-year plan launched in January 2018 to cut costs and boost e-commerce investment to fend off competition from Amazon.

($1=0.8314 euros)

(Reporting by Dominique Vidalon. Editing by Clarence Fernandez and Mark Potter)