PARIS — Carrefour SA said it expects its operating profit to fall 23 percent in the first half and launched a worldwide action plan to turn around its fortunes, after sales rose just 1.6 percent in the second quarter, impacted by a continued deterioration of hypermarket sales in France.
“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,” stated chief executive officer Lars Olofsson. “In addition to France, all of our teams are now being mobilized to support this goal.”
The group, which has issued several profit warnings in the last year, suffered a further blow to its prospects with the collapse of a planned merger deal in Brazil.
Carrefour announced it had dropped plans to merge its Brazilian assets with those of Companhia Brasileira de Distribuição after the Brazilian National Development Bank announced overnight it was rescinding its proposed financing for the deal.
The world’s second largest retailer behind Wal-Mart Stores Inc., Carrefour forecast an operating profit of 760 million euros, or $1.06 billion, in the first half, versus 989 million euros, or $1.31 billion, during the same period in 2010. Dollar figures have been converted at average exchange rates for the periods to which they refer.
“This drop is largely attributable to our French operations’ underperformance,” Carrefour chief financial officer Pierre Bouchut told analysts on a conference call.
The performance worsened in May and June, after Carrefour made the mistake of raising prices in France earlier than its competitors, he added.
In the first six months of the year, operating profit fell 35 percent in France, decreased slightly in the rest of Western Europe and posted “solid growth” in emerging markets, he said.
Bouchut noted the consensus market forecast called for the retailer to post an operating profit of 2.6 billion euros, or $3.17 billion at current exchange, in 2011 as a whole. Carrefour will provide guidance and details of its action plan when it publishes first-half results on Aug. 31.
The retailer posted sales of 22.4 billion euros, or $32.23 billion, in the three months ended June 30. Sales were up 1.6 percent in France, down 0.7 percent in other Western European markets and up 11.3 percent in Brazil, which has now become the second-largest contributor to group sales after France.
Carrefour had hoped its planned linkup with CBD, whose trading name is Grupo Pão de Açúcar, would result in the creation of Brazil’s largest retailer, but the project ran into strong opposition from the start from rival French supermarket operator Groupe Casino, which holds 43 percent of GPA’s capital.
“With this BNDES decision not to participate in the project, we today note that the necessary conditions to the completion of this project have not been met,” said Bouchut. “This being said, Carrefour will continue to explore all other major value creative opportunities in line with our strategy and notably in emerging markets.”
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews