The difficulties Carrefour faces in turning its business around this year were evidenced today with the news that the French retailer's first half operating profit dropped by 23 per cent. Carrefour's first half operating profit stood at €760 million, while its Q2 sales rose slightly to €22.4 billion, broadly in line with analyst expectations.
Carrefour is planning to broaden its action plan in a bid to grow profits this year, with France at the centre of its efforts. "Carrefour is devising and implementing an action plan with the objective of attaining the group's 2011 target of a progression in sales and current operating income," Chief Executive Lars Olofsson said.
The poor performance is also reflected in its hypermarket division, despite the continued efforts by Olofsson and his team to revitalise the segment with 'Carrefour Planet'. Sales at French hypermarkets open at least a year dropped 3.3 per cent in Q2.
Carrefour admitted that it made a tactical error in raising prices before its rivals, as a result of increased commodity costs, while the continued saga in Brazil - now thought to be dead in the water - has done little to satisfy Carrefour investors.
As RBS analyst Justin Scarborough admitted ahead of the announcement, "questions have been raised whether the [Brazil] deal would be in the national interest as it 'the resulting group would be mostly controlled by French nationals and would raise competition concerns in Brazil's retail sector'." Now, it looks like we'll never find out. (13 July)
© 2011 - ESM: European Supermarket Magazine
