Carrefour predicts domestic turnaround

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Tom Joyce

BY TOM JOYCE

@tomfruitnet

Carrefour predicts domestic turnaround

The French retail giant expects to see big improvements in domestic sales in the next two years, as it seeks to consolidate in China and Brazil

Carrefour predicts domestic turnaround

Carrefour chief executive Georges Plassat

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French retailer Carrefour last week signalled its intent to boost operating margins on the domestic market following an announcement of higher profits from its Brazilian and southern European operations.

In a rare attempt to reassure investors, chief executive Georges Plassat predicted an increase in operating margin in France of 0.5 per cent within the next two years.

Carrefour's issues in France have included bad weather and strikes, which knocked sales at its hypermarkets, while the integration of loss-making Dia has hit profitability.

Although first-half recurring profit rose by an encouraging 5.3 per cent to €706m, operating profit in France fell by 3 per cent to €312m.

Since it makes 73 percent of its sales in Europe, Carrefour is pursuing a global revival by focusing on price and cost cuts, and expansion into smaller convenience stores, while also renovating its core hypermarket network. It has confirmed plans to invest €2.5bn-€2.6bn in renovating and expanding stores.

Carrefour has equally revealed that it is open to investors in its loss-making Chinese arm. The company has already laid out plans to expand in e-commerce and convenience stores in China and to open logistics centres. Plassat also raised the prospect of involving local players in the consolidation of its Chinese assets, a formula utilised in Brazil.

The chief executive revealed that Carrefour would stick to plans for a possible flotation of its Brazilian unit, which includes Brazil's largest cash-and-carry store operator.

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