A day after Carrefour ousted its chairman, the French hypermarket operator said profits of continuing operations rose only 3.3 percent in 2006 as a result of margin losses from substantial price cuts in its highly competitive home market.
PARIS — A day after Carrefour ousted its chairman, the French hypermarket operator said profits of continuing operations rose only 3.3 percent in 2006 as a result of margin losses from substantial price cuts in its highly competitive home market.
Carrefour, the world's second-biggest retailer after Wal-Mart, on Thursday said net income last year reached 1.86 billion euros, or $2.34 billion, from 1.8 billion euros, or $2.24 billion, a year earlier, widely meeting analysts' consensus expectations. Currency conversions were made at average exchange rates for the respective periods.
On Wednesday, the company appointed Robert Halley, whose family is Carrefour's largest shareholder, to replace Luc Vandevelde as chairman. Vandevelde, whose Change Capital Partners owns Jil Sander, had acquired some 10 million euros, or $13.1 million, in Carrefour stock on the open market, in a move interpreted to be the first step to a takeover attempt.
Vandevelde's departure came right after Bernard Arnault, the chairman of LVMH Moët Hennessy Louis Vuitton, acquired a 9.1 percent stake in Carrefour, raising questions about the retailer's future. Arnault's stake was taken jointly with Los Angeles-based private equity fund Colony Capital, making the two partners the second-biggest shareholder after the Halley family, which holds a 13 percent stake.
During a press conference on Thursday, Jose-Luis Duran, Carrefour's president, said representatives for Arnault and Colony had made "brief" and friendly contact with him on Wednesday.
Though Duran declined to comment on Vandevelde's departure and on Halley's arrival, he said the management shuffle didn't presuppose a major strategy shift.
"The reasons [Vandevelde was ousted] are proper to the management board and to Luc Vandevelde," said Duran. "It was not linked to operating strategy."
Speaking of Arnault and Colony, Duran said he didn't expect their arrival to change Carrefour's current direction. "I think we all share the same objectives: to create value for shareholders and serve or clients," he said. "I have the impression the new investment is long term."
Duran and Vandevelde had been trying to whip Carrefour into shape over the last two years by consolidating less profitable businesses, cutting prices in France and making acquisitions in promising growth markets such as Poland.
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