Carrefour Meets Profit Target, Hires Tesco’s McCann (Update1)

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Jan. 15 (Bloomberg) -- Carrefour SA, Europe’s biggest retailer, met its full-year profit target and named Tesco Plc’s James McCann head of its French operations to bolster sales in its home market.

Operating profit fell about 16 percent to 2.78 billion euros ($4 billion) in 2009, the Paris-based grocer said late yesterday. That was at the higher end of its forecast of 2.7 billion euros to 2.8 billion euros and beat the 2.6 billion-euro average estimate in a Bloomberg survey of 14 analysts. Carrefour rose as much as 3.2 percent in Paris trading today.

While the retailer posted its first quarterly sales increase in a year in the fourth quarter, revenue declined in France, the company’s biggest market. McCann, who previously headed Tesco’s operations in Malaysia and Hungary, will be part of Carrefour’s newly formed top management team under the direction of Chief Executive Officer Lars Olofsson.
“Mr. McCann will bring us new energy, management skills and lots of experience with customer approach,” Chief Financial Officer Pierre Bouchut said on a conference call yesterday. “It will be a lot of added value for the Carrefour team.”

The five-member management team also includes Bouchut, international operations director Thierry Garnier, commercial and marketing director Jose Carlos Gonzales-Hurtado and a yet- unnamed director for Europe excluding France.

Carrefour gained as much as 1.11 euros to 35.71 euros in Paris and was up 3.1 percent at 35.66 euros as of 9:56 a.m.

Sales Rise

The retailer plans to invest about 230 million euros saved by more-efficient purchasing into discounting to attract shoppers in France and western Europe, Bouchut said on the call.

Fourth-quarter revenue rose 1 percent to 26 million euros, after Carrefour opened more stores and demand increased in Latin America, the company said. Sales at stores open at least a year declined 0.9 percent, or 1.3 percent excluding gasoline.

The retailer stepped up the opening of smaller venues in Europe as shoppers continued to shun its suburban superstores. Discounts and ramped-up advertising failed to inspire consumers in western Europe, while Brazil and the rest of Latin America fared better, posting 20 percent growth.

“Despite the group’s efforts in terms of advertising and price cuts, the overall results of 2009 are rather mediocre,” said Nicolas Champ, an Paris-based analyst at Oddo & Cie.

Domestic Weakness

Revenue in France, which represents about half of the company’s total, dropped 0.1 percent. Same-store sales at superstores declined 2.7 percent on slowing demand for both food and non-food items such as household appliances and electronics.

Same-store sales in western Europe, excluding France, fell 4.5 percent, led by a 5.8 percent decline in Spain. Revenue on that basis fell 3.2 percent in Italy and 2.1 percent in Belgium.
In Latin America, same-store sales gained 4.1 percent in the quarter, while Asian revenue slipped 0.4 percent. Sales in eastern Europe dropped 2.9 percent.

Carrefour will release full fourth-quarter and 2009 results on Feb. 19.


--Editors: Chris Staiti, Paul Jarvis.

To contact the reporter on this story: Ladka Bauerova in Paris at +33-1-5365-5057 or lbauerova@bloomberg.net.

To contact the editor responsible for this story: Celeste Perri at +31-20-589-8505 or cperri@bloomberg.net.