Carrefour sets ambitious targets
growth targets for 2003 but that it was raising the bar even higher
in 2004 as it revamped its French operations and continued its
The company, which is the world's number two food retailer, had already reported sales of €79 billion for 2003, an improvement of 6 per cent on the previous year at constant exchange rates (or 2.9 per cent in actual terms), but today unveiled an equally impressive profit improvement.
Operating profits were 4.4 per cent higher at €4.9 billion, while pre-tax profits rose 11.6 per cent to €2.8 billion, helped by lower operating costs and a reduction in financial charges as the company reduced its debt levels.
But it was not all good news. Exchange rate fluctuations in the Americas meant that earnings before interest and tax (EBIT) there were some 46 per cent lower than in 2002 at just €13 million, while the French business continued to struggle from weak consumer spending levels, managing only a 3.9 per cent increase in EBIT to €2.1 billion.
In contrast, EBIT from the rest of Europe posted an impressive 19 per cent increase to €952 million.
Latin America apart, the group's performance in 2003 was impressive, with a steady expansion of its store portfolio (some 969 outlets were opened) allowing it to roll out formats best suited to the demands of each market where it operates, be it hypermarket, supermarket, convenience store or discounter.
But Carrefour is not prepared to rest on its laurels. The company is targeting growth of 6 per cent for sales in 2004, at constant exchange rates, a move which will allow it to further reduce its debts and improve its capacity for further capital expenditure - it hopes to build 50 hypermarkets, 115 supermarkets, 560 discount stores, 170 convenience outlets and five cash and carry warehouses in 2004.
The company also plans major overhaul of its French hypermarket business - hard hit by a downturn in consumer spending there - during the year. French sales growth was just 1.7 per cent in 2004, despite the success of Carrefour's convenience and discount operations there, and the group will have to take a long hard look at its hypermarket pricing policy if it is to redress the balance.
Meanwhile, one of Carrefour's principal French rivals Auchan is in talks with its Italian partner IFIL over the future of their Rinascente joint venture. Rinascente is one of the leading Italian retail groups and is controlled by the Eurofind, a 50:50 partnership between Auchan and IFIL.
Reports in the Italian press suggested that the two companies were considering splitting the business, giving Auchan control of the Rinascente food retail business while IFIL retained ownership of Eurofind's non-food operations (department stores, DIY stores and clothing s).
The groups have confirmed that talks are currently taking place over the future of Rinascente, but have declined to discuss the exact nature of the negotiations.