PARIS — Could Carrefour finally be turning a corner?
The French retailer’s shares closed up 6.7 percent at 16.81 euros, or $21.14, on the Paris Bourse on Thursday after the company revealed it had narrowed the first-half net loss compared with a year earlier and detailed elements of its turnaround plan, including 600 job cuts.
“I am very confident,” Carrefour chief executive officer Georges Plassat said in a three-hour press conference, during which he often displayed a combative streak. “We’re still here, but maybe we’re going to change our game. We were at the back of the court. We may step up to the net.”
Analysts hailed the figures as the first sign of change since Plassat took over in May from his predecessor Lars Olofsson, who struggled to turn around Carrefour’s underperforming hypermarket business and presided over a string of profit warnings.
The world’s second-largest retailer behind Wal-Mart Stores Inc., Carrefour posted a loss of 31 million euros, or $40.2 million, in the six months ended June 30 versus a loss of 249 million euros, or $349.3 million, during the same period last year.
The retailer attributed the loss mainly to the cost of selling its stake in Greek supermarket chain Marinopoulos and closing its two stores in Singapore. Not including discontinued operations, Carrefour would have posted a net profit of 199 million euros, or $258.3 million, compared with a loss of 879 million euros, or $1.2 billion, during the corresponding period in 2011. Dollar figures have been converted at average exchange rates for the periods to which they refer.
First-half operating profit fell 8.2 percent to 769 million euros, or $998 million, exceeding analysts’ expectations. Sales rose 0.9 percent to 38.8 billion euros, or $50.38 billion, as gains in Latin America were offset by continued sluggishness in its core European markets, in particular southern Europe.
Plassat said Carrefour would offer voluntary redundancy to between 500 and 600 administrative staff at its headquarters, but added he did not predict further job cuts at this stage.
He declined to provide detailed figures for his turnaround plan, saying his efforts would be judged on the company’s financial results. Reiterating comments he made at the annual general meeting in June, Plassat said the process would likely take three years.
Chief financial officer Pierre-Jean Sivignon said the company would no longer issue guidance, but simply comment on market consensus estimates. He added that Carrefour remained comfortable with analysts’ forecasts of full-year operating profits of 2.03 billion euros to 2.09 billion euros, or $2.55 billion to $2.63 billion.
Plassat confirmed capital expenditures would total some 1.6 billion euros, or $2 billion, in 2012. He acknowledged this amount would have to rise next year in order to fund Carrefour’s ambitions, but said he was opposed to a capital increase.
Instead, the company will need to track and eliminate waste and trim financial costs by curbing debt, Plassat said. Carrefour’s net debt totaled 9.6 billion euros, or $12.5 billion, at the close of the first half, down 9.6 percent year-on-year.
“Our debt is manageable, but it does not give us any margin for maneuver to turn around the company, so we have to work on it,” he said. “We have to improve our production of operational cash flow.”
Plassat said Carrefour was mulling whether to stay in Indonesia and Turkey, where it has local partners, but he pledged to continue investing in the company’s core markets: Europe, Brazil and China.
The executive also remains committed to the nonfood category, which he estimated accounts for around 30 percent of sales in Carrefour’s hypermarkets.
Unlike Olofsson, a Nestlé veteran, Plassat has a strong track record in ready-to-wear, having joined Carrefour from fashion group Vivarte, which owns brands including the Minelli and André footwear chains and the Kookaï and Naf-Naf women’s wear stores. Addressing the prospects of the textiles division for the first time, he expressed confidence that this sector could grow.
“Currently, the average weight of textiles in global store sales is less than 8 percent, but when you look at it in terms of absolute value, it remains an extremely large business, and I am convinced that, by reintegrating this into our core competencies and focusing on great products, which are not necessarily in competition with those of specialists, we can very clearly increase this share,” he said.
“What we have to do with textiles in hypermarkets is to have better stock management,” he said, noting that unpredictable weather had left many retailers holding large inventories. “One of the strengths of hypermarkets is that they can make a significant portion of their offer less seasonal.”
The executive’s approach to textiles is part of an overall drive to simplify its business, with fewer products on shelves and everyday low prices on basic foods. Promotions increasingly will target high-demand branded goods and advertising will no longer be limited to traditional media, Plassat explained.
The annual Veuve Clicquot Polo Classic in Pacific Palisades this weekend drew Kate Hudson, Tracee Ellis Ross, Laura Dern and more. See pictures of the star-studded event on WWD.com. (📷: @chelsealaurenla) #wwdeye
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye