Carrefour store

PARIS — Carrefour SA said Tuesday it had underestimated the impact of one-off charges in Brazil resulting from an audit, and they would now total 550 million euros, or $725.5 million at current exchange rates, instead of the initially reported sum of 180 million euros, or $237.5 million.

This story first appeared in the December 1, 2010 issue of WWD.  Subscribe Today.

The disclosure sent shares down more than 7 percent in morning trading on the Paris Bourse.


The world’s second-largest retailer behind Wal-Mart Stores Inc. said that given the nonrecurring and exceptional amount of the charges, they would now be tallied as nonoperating income.

Carrefour chief executive officer Lars Olofsson said in a conference call Tuesday that the Brazilian charges, which were first revealed Oct. 14, were the result of a “malfunction.” The retailer replaced its management team in Brazil in August and does not expect its results in Brazil to have any impact on sales and operating profit targets after 2012, he added.

Carrefour chief financial officer Pierre Bouchut said the one-off charges included 110 million euros, or $145.1 million, in provisions for inventory write-offs, after poor sales in Carrefour’s Brazilian hypermarkets left it overstocked; 35 million euros, or $46.2 million, in uncollected rebates from suppliers, due to missed sales targets; 280 million euros, or $369.4 million, in provisions for ongoing labor and tax litigation; 75 million euros, or $98.9 million, in depreciations, and 50 million euros, or $66 million, in other accounting adjustments.

Carrefour said last month it now expected an operating profit of 3 billion euros, or $4.19 billion, in 2010, down from a previous forecast of 3.1 billion euros, or $4.33 billion.

Olofsson said the retailer had lost market share in France, which accounts for more than 40 percent of the group’s sales, since September due to increased price competition, but it was satisfied with the results of its five pilot stores for the new Carrefour Planet hypermarket concept.

“I said that the first objective of Carrefour Planet was to increase the frequency and the number of clients to our stores, and today, I can confirm to you that that has been achieved,” he said.