Shares in Carrefour fell today (13 October) after the French retailer issued another warning on its profits for 2011.
Carrefour, which reported its third-quarter sales this morning, said its annual operating income could be down by 15-20% this year.
The latest warning followed Carrefour’s admission in August that operating income could fall by around 15% this year.
CEO Lars Olofsson said the new forecast was made “as a matter of prudence” amid an “increasingly uncertain environment”.
However, Carrefour’s shares were down 5.47% at EUR16.93 at 16:47 CET. Sanford Bernstein analyst Christopher Hogbin said the profit warning had “overshadowed” a set of sales results that were “largely in line” with expectations.
The retailer reported a 0.3% increase in sales, excluding VAT, to EUR22.8bn. At constant exchange rates, sales were up 1.6%.
Nevertheless, Carrefour’s like-for-like sales, excluding fuel and adjusted for any calendar impact dropped 0.6% in the third quarter. In the first half of 2011, Carrefour’s like-for-like sales were up 0.1% year-on-year.
The retailer said there had been a “deterioration” in its like-for-like sales in France during the third quarter as it launched its new “action plan” to revitalise its domestic business. Carrefour said the plan was a reason for the 4.4% fall in like-for-like sales from its hypermarket business. On a brighter note, like-for-like sales from the convenience stores under the Carrefour banner were up 17%.
Like-for-like sales in Spain fell 3.7% but Carrefour said the performance was an improvement on the 4.9% drop it saw in the country in the second quarter of the year. Carrefour’s food sales in the country were “resilient”, it said.
Carrefour’s like-for-like sales in Latin America were up 7.4%, with growth in Argentina, Brazil and Colombia. Its like-for-like sales in Asia fell 1.6%, partly due to a 1.7% drop in China.
However, Carrefour’s performance in France will remain a key concern for shareholders. Hogbin said investors should question how realistic it is that Carrefour will see margins in France improve in the short term.
“To become more optimistic on the investment case, we believe investors would need to become comfortable at the prospect of margin recovery in France, but in the face of a second profit warning in the space of six weeks, there is little evidence to support such a belief,” he said.