Euro woes may curb Carrefour revenues
PARIS - The Associated Press
A customer pushes a shopping cart at a Carrefour store in Nice, France. REUTERS photoFrench retailer Carrefour reiterated a warning that profits could fall by up to 20 percent in 2011 and reported that sales barely grew during the year as the bleak economic backdrop in Europe offset advances elsewhere.
Europe’s largest retailer by sales has struggled over the past year and has repeatedly lowered its profit guidance. Yesterday, it confirmed that it was still expecting 2011 profits to be down between 15 to 20 percent over the year before, but acknowledged that they would likely come in at the bottom of that range.
The company posted 91.5 billion euros ($117.4 billion) in sales last year, up 1.1 percent. The gain was due to strong demand in Asia and Latin America as Europe’s debt crisis decimated consumption in these markets.
But Carrefour’s problems have gone beyond the poor economic conditions, including struggling with lots of out-of-stock merchandise. There have also been persistent reports that major stockholders are unhappy with CEO Lars Olofsson. No mention of that was made during an analysts’ call after yesterday’s sales update.
Carrefour has tried to turn around its performance with a two-pronged approach: moving toward more consistent lower pricing in its stores, instead of frequent promotions, and the launch of a line of more upmarket stores, called Carrefour Planet.
Chief financial officer Pierre-Jean Sivignon said the move toward lower prices was partially responsible for the weak revenue growth. However, he said the company expects to eventually draw more customers to offset the lower prices and that the strategy needed more time to bear fruit.