By  on March 12, 2009

PARIS — Carrefour reported a 45 percent decline in 2008 profits after a sharp drop in consumer confidence in France cut into margins.

The French hypermarket operator, the world’s second-largest retailer after Wal-Mart Stores Inc., said its group share of net profit slid to 1.27 billion euros, or $1.87 billion, from 2.29 billion euros, or $3.37 billion, a year ago, missing most analysts’ expectations.

Operating income improved 0.3 percent to 3.3 billion euros, or $4.85 billion, the retailer said.

Carrefour, whose largest shareholder is LVMH Moët Hennessy Louis Vuitton chief Bernard Arnault and Colony Capital, said a “sharp” slowdown in fourth-quarter discretionary spending, coupled with a decline in food prices, worsened its performance.

Sales for the year gained 5.9 percent to 87 billion euros, or $127.97 billion, propped up by deep discounts, especially at the end of the year, and expansion in high-growth markets like China and Brazil.

Carrefour has been up against weak spending in its home market of France, where the economy skidded at the end of the year.

The company, which experienced management upheaval last year as Arnault and Colony grew impatient, said improving like-for-like sales in France, which grew 0.9 percent in 2008, would be a priority this year. Carrefour said it would invest 600 million euros, or $882 million, to do so by improving operational efficiency and marketing.

“Our objectives for the future are clear: To generate profitable organic growth that is durable and above the market and to improve our margins,” said Lars Olofsson, who replaced José Luis Durán as chief executive in November.

Olofsson said Carrefour was now identifying needed strategy shifts and that it would implement changes in the second half of the year.

Growth in other markets helped offset France’s soft performance. Sales in Europe grew 5.4 percent. Asian sales grew 13.3 percent and sales in Latin America improved 31 percent.

Operating profit from French operations dropped 3 percent last year as French households reined in spending in the difficult economy. Elsewhere in Europe, operating profit declined 5 percent, hamstrung by the deterioration of the Spanish economy.

Meanwhile, operating profit in Latin America, pumped up by Brazil, grew nearly 31 percent, and operating profit in Asia improved almost 11 percent. Carrefour said it would propose an unchanged dividend for 2008 of 1.08 euros, or $1.59, a share.

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