Carrefour reports net profit in first half as it pushes on with 3-year turnaround plan

Carrefour turnaround plan brings H1 profit

PARIS — The CEO of Carrefour SA on Tuesday said his three year turnaround plan is “profoundly changing” the French retailer, which reported a net profit of €82 million ($104 million) in the first half.

The result compares with a net loss of €58 million in the same period a year earlier, while revenue rose 6 percent to €43.73 billion.

Since CEO Lars Olofsson took over last year, Carrefour has sought to gain market share in France, which accounts for 40 percent of sales, by slashing prices, promoting the brand, introducing a discount range and accelerating the conversion of stores to the Carrefour banner.

“We are profoundly changing the way we are managing our business in France,” he said at a press conference at the company’s headquarters in Paris.

Details on the cost of the overhaul will be revealed on Sept. 16, he said.

Key to those changes include revamping the hypermarket concept that Carrefour claims to have invented in 1963. The superstores, which sell everything from flatscreen televisions to bikinis, are moving from an “everything under one roof” concept to a more targeted offering, he said.

In five pilot stores opened recently across Europe, Carrefour is offering new services such as baby-sitting and a “more pleasant shopping experience” with more color and a market atmosphere in the fresh produce area, Olofsson said.

The discount range has been a “huge success” in France and is being rolled out in Spain, Belgium and Italy, Olofsson said.

Carrefour is also cutting costs by pooling purchases in Europe, standardizing processes across departments, and merging four administrative sites in the Paris area into one.

An improved price image helped like-for-like market share in France increase by 80 basis points since the beginning of the year under the Carrefour banner, the company said.

But because competitors opened new stores while Carrefour didn’t, overall market share was stable at 24 percent, Olofsson said.

In Belgium, where Carrefour is closing or selling stores and laying off workers, the company has signed an agreement with unions that will help relaunch the company “on a redefined and sound footing.”

Carrefour is also targeting expansion in growing markets such as Brazil and China. This year, it plans 1250 store openings, including 143 in China and 374 in Turkey.

In the first half, Olofsson said Carrefour “turned in a good performance” and that he is “confident of achieving our 2010 objectives.”

Carrefour is aiming for what it calls activity contribution — or underlying operating profit — of €3.1 billion for the full year. In the first half, it reported an activity contribution of €1.09 billion.

Since then, July was “satisfactory,” while August was a “little bit weaker,” Olofsson said.

From continuing operations, Carrefour reported a net profit of €67 million in the first half compared with a net loss of €48 million a year earlier. Carrefour booked one-off charges of €384 million in the six month period, mostly from restructuring.

Shares were down 0.9 percent at €35.73 in Paris.

Before joining Carrefour, Olofsson, a Swedish national, spent most of his career with Nestle.