Carrefour warns on profit as Europeans cut back

Thu Oct 13, 2011 6:49am EDT
 
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By Dominique Vidalon

PARIS (Reuters) - Carrefour, Europe's biggest retailer, issued its fourth profit warning in as many months on Thursday, adding to signs cash-strapped shoppers are cutting back and increasing doubts about its turnaround plan.

The French group, battling to reverse years of underperformance in its main western European markets, said it expected 2011 operating profit to fall by up to 20 percent, compared with about 15 percent previously.

Its shares, already down around 40 percent this year, were off 5 percent by 1025 GMT.

The warning, coming after several strategy U-turns, is a fresh blow to the credibility of chief executive Lars Olofsson, who so far has retained the backing of the group's powerful top shareholder Blue Capital -- an alliance between French luxury tycoon Bernard Arnault and U.S. investor Colony Capital.

A Blue capital spokesman would not comment on recent speculation that Olofsson may be running out of time.

A source close to the matter said the alliance understood the turnaround, notably in France, could not succeed overnight.

In a call with analysts, new finance chief Pierre-Jean Sivignon blamed the warning mainly on worsening trading conditions in Europe, although he also flagged a drop in discretionary spending in China.

European retailers are struggling in their home markets as shoppers are hit by higher prices, subdued wage growth and government austerity measures.   Continued...