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Carrefour Profits Up

Best first half results in three years.

PARIS — Carrefour Group, the world’s second-largest retailer after Wal-Mart Stores Inc., reported a 1.2 percent increase in first-half net profits to 750 million euros, or $1.15 billion at average exchange rates, calling the results its best for the period since 2005.

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At a press conference at the group’s headquarters here Friday, chief executive officer José Luis Duran trumpeted the retailer’s “strong performance” in light of the “strained economy” and confirmed Carrefour is on track to meet its full-year sales growth target of 7 percent at constant exchange rates.

He noted food sales in French hypermarkets were “much improved” in July and August versus the second quarter, although “spending is still weak.”

“We are a solid, profitable group that is capable of living up to the challenge….We don’t count on the environment to improve, we count on ourselves,” he said.

As reported, sales for the group, which has luxury titan Bernard Arnault on its supervisory board, climbed 8 percent to 41.94 billion euros, or $64.19 billion at average exchange rates. A drop in hypermarket sales impacted results in Carrefour’s home market, which represent 46 percent of the group’s turnover.

Colony Capital and Arnault recently increased their stake in Carrefour to 13.5 percent from 10.7 percent in July.

At the meeting, Duran touted “excellent” performance in growth markets, particularly in Brazil, the group’s third most important market behind Spain and France. Carrefour acquired the discount Brazilian hypermarket chain Atacadao last year.

The group’s retail banners — which include Proxi, Shopi, 8 à Huit, Ed and Champion — span the hypermarket, supermarket, hard discount and convenience store sectors. “All of our territories will be multiformat by 2010,” he said.

Carrefour also plans to continue to downsize its hypermarkets, Duran said, prioritizing food over textiles. Since 2006, the size of the average Carrefour hypermarket has been reduced by two-thirds.

“As you know, textiles are suffering both in supermarkets and specialty stores. People’s spending budgets are different today from what they were 12 months ago. There will certainly be changes in our order books and volumes of textiles,” he said.

More aggressive promotions are also planned to lure shoppers back into the hypermarket aisles.

Carrefour’s stock rose 7.2 percent to 36.13 euros, or $53.30, Friday in trading on the Paris Bourse.