PARIS -(Dow Jones)- Shares in French retail giant Carrefour SA (CA.FR) traded lower Friday on disappointment over the performance of the company's hypermarket stores in one of its fastest growing markets, Brazil.
"Brazil remains a sensitive subject, it's an emerging market with such strong potential that it's a problem to have disappointing results there," said Jean- Marie Lhome, analyst with Aurel.
Carrefour, the world's second largest retailer after U.S.-based Wal-Mart Stores Inc (WMT), Thursday doubled its estimates of charges in Brazil linked to tax litigation, inventory write-offs and other problems to EUR180 million, prompting it to slightly reduce its operating profit forecast for this year.
There has been an "accumulation of problems over several years," in the region, but no fraud or misconduct, Carrefour Financial Director Pierre Bouchut said Thursday as the company reported third quarter figures.
Carrefour appointed a new management team in Brazil this summer and the results of an external audit on the Brazilian operations are expected in December.
Third quarter sales in Brazil were mixed - while hypermarket sales disappointed the market falling 0.8% on a like-for-like basis, sales at Carrefour's Atacadao chain beat expectations and grew nearly 13%.
At 1124 GMT, Carrefour shares traded down 4.1% at EUR38.48 while the CAC-40 index traded up 0.2%.
Carrefour Thursday reported a 6.7% rise in third quarter sales of EUR25.62 billion with growth from Brazil and China offsetting weakness in Europe.
The company's shares have outpaced the CAC-40 index over the past six months rising 1.7%, compared with a 6% drop in the CAC-40. The company's ambitious turnaround plans have also prompted a series of increases in analyst estimates.
By Mimosa Spencer, Dow Jones Newswires; +33 1 40 17 1773; mimosa.spencer@ dowjones.com
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