Carrefour disappoints markets

The world's second-largest retailer after Walmart, Carrefour, disclosed on Thursday that its 2011 profit fell by 14.3 percent after a year marked by multiple profit warnings right from the start.

The French company's net profit dropped to 371 million euros ($488 million), prompting the management to halve the dividend to 0.52 euros per share.

Operating earnings dipped by 19.2 percent to 2.18 billion euros despite the fact that sales excluding VAT edged up by 0.9 percent throughout last year.

Outgoing Carrefour Chairman and Chief Executive Lars Olofsson emphasized the tough environment the hypermarket chain faced in 2011, particularly in southern Europe where economies were hit hardest by the eurozone debt crisis.

Undiluted confidence

But Olofsson put a positive spin on this year's developments. "The group is ahead of cost-cutting targets and will exercise strict cash discipline to adjust to the environment in which we're operating," he said in a statement in Paris.

The company announced it would put on hold its Carrefour Planet store expansion project across Europe, with the oversized hypermarkets failing to live up to expectations. At the end of 2011, the firm had 81 such Planet stores, accounting for about 10 percent of total sales.

Carrefour said it would now put into practice what it called "local action plans" in southern Europe, aimed at lower price structures and a considerably enhanced product offer.

"It appears that Carrefour is getting to grips with its problems, but nonetheless there will be blood and tears in 2012," said Jean-Marie Lhome, an analyst with French market research and investment company Aurel BGC.

hg/slk  (AFP, Reuters)