By  on July 10, 2008

PARIS — France's Carrefour, the world's second largest retailer after Wal-Mart Stores Inc., said Wednesday that second-quarter sales grew 6.7 percent at constant exchange rates, despite a drop in its hypermarket sales at home.Sales in the three months through June 30 advanced to 23.72 billion euros, or $37.08 billion, from 22.37 billion euros, or $30.16 billion, in same period last year, below most analysts' expectations. Excluding new openings and acquisitions, sales in the quarter grew 2.2 percent.Dollar figures have been converted from the euro at average exchange rates for the applicable periods.Sales in the key French market, which generates half of Carrefour's sales, advanced only 0.5 percent, hamstrung by consumer worries about the economy and high inflation. Sales in French hypermarkets dropped 2.4 percent, Carrefour said.José Luis Durán, Carrefour chief executive officer, told a conference call Wednesday that he was unhappy about the performance in France and that he would immediately implement measures to try to stem the drop.He underscored how difficult the current climate had become. "We can't count on the environment, we need to attack," Durán said.He said Carrefour would accelerate promotional activity in its French hypermarkets while also speeding plans to transfer its Champion supermarkets to the Carrefour Market brand in France."Being cautious doesn't mean that we are not ambitious," said Durán, who added that Carrefour would also concentrate on building business in its growth markets in Eastern Europe, South America and China.He said Carrefour, whose largest shareholder is LVMH Moët Hennessy Louis Vuitton chief Bernard Arnault and Colony Capital, would proceed with plans to spin off its property. He did not offer a timetable.Durán forecast that operating profits in the first half would grow 5 percent. Durán last month cut Carrefour's full-year guidance, citing deteriorating market conditions in France.He said that the situation has "not worsened" in July and that activity linked to the seasonal sales period "was starting pretty correct."Sales in Europe outside of France grew 3.7 percent, boosted by an acceleration of 8.3 percent in sales in Spain. In Asia, sales grew 4.1 percent, while sales in Latin America advanced 27.4 percent. In Eastern Europe, sales gained 20 percent, with spectacular growth in Poland and Romania.

Carrefour released the figures after the market closed here. Its stock closed up 2.41 percent to 34.45 euros, or $54.18, in trading on the Paris Bourse. The stock, which was trading above 50 euros, or $78.63, in early April, has come under pressure recently on poor consumer spending in France."We are not happy about the stock price," Durán said. "There are opportunities in this environment."

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