Carrefour must go ‘further and faster’ after profits dip
2004 sales up 4 per cent
Carrefour admits it has to “go further and faster to return to profitable growth” in 2005 after discounting hit 2004 profits.
The world’s second biggest retailer, now led by former Marks & Spencer chairman Luc Vandevelde, set out its determination to get back on track.
In 2004, group sales grew by 4 per cent to €72.6bn, but net profits fell to €1.39bn from €1.629bn in 2003. During 2004, Carrefour cut more than €300m from prices as it struggled against tough competition in France from rivals such as LeClerc, as well as hard discounters taking a bigger share of the French market.
During the year, Carrefour said it lost share in the French hypermarket sector, but gained share in supermarkets and hard discount stores “which enabled us to maintain food market share overall in France”. More than three quarters of its stores are now number one or number two against their local competitors in France, compared to just 30 per cent at the start of the year.
French sales increased by 0.1 per cent, at constant exchange rates, e European sales outside France increased by 6.3 per cent, in the Americas by 7.5 per cent and Asia by 18.8 per cent.
The year saw the sale of 57 supermarkets in Spain, Argentina and Brazil, balanced by acquisitions in Greece and Poland and franchise agreements in France and Italy. Worldwide, Carrefour now operates around 10,400 stores.
[img r]M&Sluc_vandevelde.jpg[/img]Vandevelde took up the Chairman’s role at Carrefour last month, replacing Daniel Bernard. Vandevelde was appointed to the Carrefour board last year as a representative of major shareholder the Halley family, who had raised concerns about Bernard’s strategy.
Carrefour said that in 2005 its aims to strengthen its price position and grow customer traffic in French hypermarkets; to communicate better to the consumer; to improve significantly its profitability and return on investment outside of France; and to prepare for accelerated growth in 2006 and 2008.
As part of its strategy to sell off underperforming assets, Carrefour also confimed its exit from Japan with the sale of its eight stores to Japanese retailer Aeon ([i]see separate article[/i]) in a deal which will give Japan’s biggest retailer the rights to use the Carrefour brand in Japan.
Carrefour is also selling its 29 hypermarkets in Mexico, along with two hypermarket developments due to open this year, to Mexican food retailer Chedraui, which operates 64 hypermarkets in the country.
