Blog: Carrefour CEO stays upbeat
Dean Best | 20 April 2009
When a company posts its first quarterly fall in sales in six years, one would expect the firm to face some flak.
However, at Carrefour, which reported a 2.8% fall in first-quarter revenue last week, there is a bullish mood about the company's prospects – and industry commentators are prepared to give the retailer's recently-appointed CEO time to turn the business around.
Lars Olofsson, who joined Carrefour in January, has set about breathing fresh life into the world's second-largest retailer. The Swede is looking to improve the performance of Carrefour's domestic operations, particularly its hypermarkets. And, last week, he insisted the retailer had put in a "resilient" performance during the first three months of 2009 – despite the drop in sales.
Carrefour has faced criticism that it has been too dependent on Europe and, in recent days, there have been renewed signs that the company wants to expand its operations into the retail sector's emerging markets, even amid the global downturn.
Last week, Carrefour executives met with over 600 suppliers in India as the French retail giant laid out plans to open its first cash-and-carry outlet in the country by the start of next year at the latest. Rumours over Carrefour's ambitions in Russia have also resurfaced, with reports that the company has made an offer for local retailer Seventh Continent.
Nevertheless, with the global recession also hitting the world's developing economies, it is likely to be some months at least before Carrefour's international ambitions become reality. Investing in India is notoriously tricky and is dependent on working with a local partner – something Carrefour has yet to nail down. And, turning to Russia, there has been some scepticism over Carrefour's reported interest in Seventh Continent. Olofsson, perhaps, has a lot on his plate at the moment.
Doing business in emerging markets requires a flexible approach – particularly in these turbulent economic times. When, for instance, financial analysts predict China's GDP growth will slow dramatically this year, it is clear that the old assumptions no longer remain.
Last week, Wal-Mart found itself in the headlines with reports that it was to cut 1,400 jobs in China. The US retail giant, however, was quick to quash those reports, telling us that its plans to restructure its business in the country would mean no job losses and would in fact help it expand in China's regional cities.
Retailers in China, however, have suffered as the downturn dampens consumer demand. Wal-Mart has been using promotions to lure in nervous Chinese consumers but, according to some local industry watchers, such moves could hold back retailers' same-store sales growth this year.
Tomorrow (21 April), Tesco issues its full-year figures. Its challenges in the UK have been well-documented but it will be intriguing to hear just how the retailer sees its international operations – including China – performing in the months ahead.
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