Sales decline dents Carrefour profit

Paris: Carrefour said 2011 profit was at the lower end of its reduced forecast range after fourth-quarter sales declined.

The French company fine-tuned its prediction for a drop of 15 per cent to 20 per cent in so-called current operating income, after twice cutting the forecast in the second half.

The economic slowdown "further impacted discretionary spending" in the fourth quarter, chairman and Chief executive officer Lars Olofsson said yesterday in a statement. Revenue fell 1 per cent to ¤24.2 billion (Dh114 billion), compared with the ¤24.4 billion average estimate of five analysts.

Europe's sovereign debt crisis has hurt consumer spending in Carrefour's domestic market, where the Boulogne-Billancourt, France-based company is cutting prices and overhauling stores. Sales also slid across Europe and in Asia during the quarter, leaving Latin America as the retailer's sole bright spot.

"There is no improvement to be expected in the coming months," Arnaud Joly, an analyst at CA Cheuvreux, wrote in a report.

"The measures taken to turn around France will take time, and non-food is likely to remain very depressed all across Europe." Joly has an "underperform" recommendation on Carrefour stock.

Carrefour fell 1.4 per cent to ¤17.21 at 9.19am in Paris trading. The stock declined 35 per cent in 2011.

Fourth-quarter sales at stores open a year or more fell 1.9 per cent, excluding currency moves and gasoline, Carrefour said.

The retailer converted 31 hypermarkets to its new format in the quarter, taking to 81 the number of Carrefour Planet stores in 2011.

The rollout for 2012 will be "pragmatically reviewed country by country," Carrefour said.

Fourth-quarter sales at Carrefour stores open at least a year fell 2.8 per cent in France and decreased 4.8 per cent in the rest of Europe, excluding gasoline, the company said. French hypermarket sales on that basis fell 4.7 per cent. Like-for-like food sales at French hypermarkets declined 3.6 per cent, while non-food sales decreased 7.2 per cent.

Spending

Carrefour attributed the drop in fourth-quarter hypermarket sales to weaker discretionary spending and the initial effects of lower prices and more targeted promotions. The retailer said it will accelerate the introduction of its so-called "click and collect Drive format" at its hypermarkets and supermarkets.

Same-store supermarket sales decreased 0.8 per cent, excluding gasoline, while convenience stores and other activities rose 3.3 per cent on the same basis. About a third of the convenience network was under the Carrefour banner at the end of December, the company said.

In Latin America, where a proposal to merge Carre-four's Brazilian unit with Brasileira de Distribuicao Grupo Pao de Acucar collapsed in July, same-store sales rose 5.6 per cent, excluding gasoline. Like-for-like sales in Asia declined 3.4 per cent, Carrefour said.

Group sales for the year totalled ¤ 91.5 billion.