PARIS — Speculation is building here that Carrefour chief executive officer José Luis Duràn is on shaky ground.
This story first appeared in the July 18, 2008 issue of WWD. Subscribe Today.
The buzz is centered on the hypermarket operator’s main shareholders — Colony Capital and LVMH Moët Hennessy Louis Vuitton chief Bernard Arnault — who are said to be losing patience with Duràn.
Sources suggested that Duràn could be on his way out. Carrefour and a spokeswoman for Arnault declined to comment.
Carrefour, the world’s second largest retailer after Wal-Mart Stores Inc., has had weak sales in France and its stock has dropped this year from more than 50 euros, or $79.47 at current exchange, to as low as 30 euros, or $47.68, this month. The stock rallied on Thursday, gaining almost 5.5 percent to close at 33.80 euros, or $53.62, on speculation that a change in command was coming.
Reports also are circulating that former French minister of finance Thierry Breton has been earmarked to replace Duràn, a Spaniard. Breton has served as ceo of France Telecom.
In another development, Colony Capital and Arnault announced they have increased their stake in Carrefour to 12.9 percent from 10.7 percent, solidifying their hold on the French firm.
Carrefour’s sales in France, which account for half of its volume, advanced only 0.5 percent in the second quarter. Sales in French hypermarkets dropped 2.4 percent. Duràn blamed a lack of promotional activity in the weak spending environment and said Carrefour would adopt a proactive strategy at home.
Overall, sales in the three months through June 30 gained 6.7 percent to 23.72 billion euros, or $37.08 billion, from 22.37 billion euros, or $30.16 billion, in the same period last year because of store openings and emerging markets. Excluding new openings and acquisitions, sales in the quarter grew 2.2 percent.
Dollar figures were converted from the euro at average exchange rates for the applicable periods.
Duràn has come under fire for a plan to switch the company’s Champion supermarkets in France to the Carrefour Market brand. Last month Duràn also cut Carrefour’s full-year profit guidance because of deteriorating market conditions in France. He forecast that operating profits in the first half would grow 5 percent, about the same pace as sales. Previously, Duràn said operating profits would outpace sales.
Since taking over in 2005, Duràn has concentrated on streamlining the business by selling unprofitable operations in countries like Portugal and Switzerland and expanding in fast-growth markets such as Poland and China.
Carrefour’s sales last year grew 7 percent to 92.3 billion euros, or $126.52 billion, at average exchange for the year, compared with 6 percent in 2006 and 4 percent in 2005 as Duràn accelerated new store openings.