Marcus Evans Group | Worldwide Headquarters | American Offices | Latin America | European Offices | African / Asian Offices

Carrefour makes £221m half-year loss

Europe’s biggest supermarket chain admits its profits will fall by 15% this year

Europe’s biggest retailer warned that “increasingly challenging” economic conditions across Europe will drag its profits down by 15% this year.

Carrefour, the world’s second-biggest retailer behind Walmart, announced a shock €249m (£221m) half-year loss on Wednesday and warned that the situation would get worse before it gets better.

Lars Olofsson, chief executive of Carrefour, which had already warned about profits levels four times in less than a year, said the results were “unsatisfactory” and promised “radical and decisive” action to put the French company “back on a sound footing to rebuild momentum”.

Olofsson, who vowed to make Carrefour “more agile” when he took charge in 2009, admitted he had made mistakes and “tried to do too much too quickly”. He said Carrefour was “biting the bullet in 2011 and rebuilding momentum in 2012 to deliver long-term sustainable profitable growth”.

But City analysts were unimpressed. “Yet another [profit warning] and yet another plan,” said JP Morgan Cazenove.

RBS analysts said: “Given Carrefour’s history on lack of delivery on its guidance, then a more aggressive stance could be taken by the market.”

At the time of the company’s last profits warning, in July, Olofsson said he still hoped to increase full-year operating profits. Yesterday the retailer said they would fall by about 15%.

The company, which runs more than 9,500 stores in 32 countries, said operating profits in its core French market dropped by 40% and Europe overall was down 33%.

It blamed the fall on the rising cost of raw materials and a reorganisation of its systems, which led to it failing to have the right stock on the shelves. The head of the company’s French business said the retailer would now focus on price cuts rather than expensive promotions.

However, the collapse in Europe was offset by a strong performance in emerging markets. The first-half loss was largely the result of an €884m writedown of the value of its struggling Italian business.

Carrefour’s shares, which have lost 40% of their value so far this year, closed down 1. 7% to €18.33. © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds