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Carrefour warns 2011 profit to fall

Carrefour warned that the economic climate was ‘increasingly challenging’

Europe’s largest retailer, Carrefour, warned full-year profits would slump 15% as it cuts prices in a bid to reverse market share losses in its home market and elsewhere in Europe.

Carrefour also unveiled a well-flagged 22% fall in first-half operating profit on Wednesday and cautioned that the economic climate was “increasingly challenging”.

Carrefour, the world’s number two retailer after Wal-Mart Stores, said it expected trends in Europe to continue “broadly unchanged”.

Analysts on average were expecting full-year pre-tax profits to drop between 11% and 15% to around €2.3bn to €2.4bn.

Carrefour shares have plunged 40% this year, hitting a more than 10-year low of €16.675 earlier this month, after a string of profit warnings tied to French underperformance and strategy U-turns, including the collapse of a deal in Brazil.

First-half operating profit fell 40% in France alone, while weak western European markets, notably Greece and Italy, also outweighed a better performance in emerging markets.

Carrefour last month admitted it made a tactical mistake in raising its prices before French rivals such as E Leclerc and Auchan, who did not follow Carrefour’s lead.

Following a review conducted by Noel Prioux, the group’s new head of France, Carrefour said it was deploying a new commercial strategy in France to “regain competitiveness and traffic in its hypermarkets” and adapting to “an increasingly challenging economic environment”.

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