PARIS — Carrefour SA, the world’s second-largest retailer behind Wal-Mart Stores Inc., said sales swung back to growth mode during the fourth quarter, despite what it called a “persistently challenging” environment.
This story first appeared in the January 15, 2010 issue of WWD. Subscribe Today.
The better-than-expected quarterly performance helped the company post a full-year operating profit of 2.77 billion euros, or $3.87 billion, exceeding its most recent guidance for a figure at the lower end of its target range of 2.7 billion euros, or $3.76 billion, to 2.8 billion euros, or $3.9 billion. Carrefour, which will disclose its full 2009 results on Feb. 19, did not provide a net profit figure.
In the three months to Dec. 31, sales rose 1 percent to 26 billion euros, or $38.25 billion, after dipping 2.9 percent to 24 billion euros, or $34.32 billion, in the third quarter. Full-year 2009 sales were down 1.4 percent to 96 billion euros, or $134.12 billion, the group said. Dollar figures have been converted at average exchange rates for the periods to which they refer.
Carrefour chief executive officer Lars Olofsson, who since his arrival one year ago has unveiled measures to cut costs and improve the retailer’s price image, has appointed James McCann as executive director for France within a newly created executive board of the group, succeeding Gilles Petit. McCann was formerly general manager of business units for U.K. supermarket giant Tesco in various countries in Asia and Europe.
McCann will be in charge of implementing an ambitious drive to revamp Carrefour’s hypermarkets in France, a market which accounts for more than 40 percent of the group’s total sales. The larger stores have been hit by a drop in consumer spending on nonfood items as a result of the global economic downturn.
Carrefour will start to test new concepts for hypermarkets in select locations in the next few weeks, but will not make an official announcement on its strategy until later this year, chief financial officer Pierre Bouchut told analysts in a conference call. He did not provide any additional details on the locations of the tests, or which nonfood categories would be concerned.
Sales in France, Spain and Portugal — Carrefour’s main markets — were affected in 2009 by deflation in food prices, Bouchut said. “Our global trading environment remains challenging, and consumption remains under pressure from rising unemployment and decreasing purchasing power,” he noted.
Bouchut said there were “encouraging signs,” however, in growth markets including China, Poland and Indonesia. “None of these point yet to a recovery, but they may signal we have hit the bottom,” he said.
Operating profit came in some 60 million euros, or $83.7 million, higher than expected thanks to an additional 30 million euros, or $41.8 million, in cost reductions, the closure of Carrefour’s outlets in Russia, the better-than-expected sales performance in the fourth quarter and a slightly positive foreign exchange impact during the same period, Bouchut said.
Carrefour shares closed down 0.8 percent at 34.56 euros, or $50.12, Thursday, before the release of the fourth-quarter and full-year sales update.