PARIS — Carrefour, the world’s second-largest retailer behind Wal-Mart Stores Inc., reported a third consecutive drop in quarterly sales and said it’s pulling out of the Russian market after less than a year.
In the third quarter to Sept. 30, sales declined 2.9 percent to 24 billion euros, or $34.32 billion at average exchange rates for the period, as a strong business in Latin America helped offset difficult markets in Western Europe.
The company also revealed plans to sell its operations in Russia, where it has opened two hypermarkets in Moscow and Krasnodar since 2008, citing a lack of growth prospects and acquisition targets in that market. For months, Carrefour had been rumored to be interested in taking over Russian food retailer Seventh Continent.
Recent press reports also had speculated the company was facing pressures from its largest investor, Blue Capital Group, to pull out of China and Brazil, but these were denied by Carrefour last week. Blue Capital Group, the investment consortium of LVMH Moët Hennessy Louis Vuitton chief Bernard Arnault and investment firm Colony Capital, holds 13.55 percent of Carrefour’s capital and 19.55 percent of voting rights.
Carrefour reiterated its objectives for the year, including costs savings of 500 million euros, or $702 million, and guided toward the lower end of its target range of between 2.7 billion euros, or $4.02 billion, and 2.8 billion euros, or $4.17 billion, for operating profit this year.
In June, chief executive officer Lars Olofsson, a former Nestlé executive, unveiled plans to revive Carrefour’s performance, save 4.5 billion euros, or $6.32 billion, by 2012 and introduce a fresh price-cuts strategy to improve its competitiveness.
Comparable sales in France, a market that accounts for more than 40 percent of Carrefour’s total sales, fell 4.2 percent, reflecting weak trading at hypermarkets, which have been hurt in the economic downturn as consumers cut spending on nonfood items. As a result, Carrefour has been focusing on smaller city center stores to lessen its reliance on hypermarkets, as well as pushing price cuts and promotions.
“The group continues to gain market share in France, reflecting the success of Carrefour Market, which offsets the disappointing third-quarter sales of our hypermarkets,” stated Olofsson.
A new manager, Guillaume Vicaire, has been appointed to run the French hypermarket operations, as Carrefour prepares to turn around the business next year.
Same-store sales in Western Europe excluding France declined 6.5 percent as difficult trading continued in Belgium and particularly Spain, where Carrefour’s operations were also hurt by lower food prices.
As expected, Latin America offset the decline in Carrefour’s European markets, posting a 5 percent increase in comparable sales, thanks to market share gains.
Comparable sales in China, a key growth market for Carrefour, declined 3.6 percent reflecting lower food prices, but gained 12.4 percent on a total basis as the company continued to open stores.
Carrefour shares closed up 0.1 percent at 31.19 euros, or $46.43, Thursday, before the release of the third-quarter sales update.