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March 12, 2009

FRANCE: Carrefour looks to boost sales, margins

French retail giant Carrefour plans to cut operating costs and increase price promotions in a bid to boost earnings and kick-start sales after posting flat annual profits.

French retail giant Carrefour plans to cut operating costs and increase price promotions in a bid to boost earnings and kick-start sales after posting flat annual profits.

In its full-year trading update, Carrefour said today (12 March) that operating profit increased by 0.3% in 2008, rising to EUR3.3bn (US$4.21bn) from EUR3.29bn last year.

Net income plunged 45% to EUR1.27bn, dragged down by one-time impairment costs of EUR396m, mainly in Italy.

Total sales rose 5.9% to EUR87bn. However, in the retailer’s home market sales were up barely 1% as the group was forced to offer price discounts at its lacklustre hypermarket business to fend off competition. France accounts for about 40% of Carrefour’s total sales.

Looking to the coming year, chief executive Lars Olofsson said: “In a trading environment that remains challenging, we will focus on boosting our sales dynamics while improving our organisation and reducing our costs.”

Olofsson, who joined Carrefour from Nestlé earlier this year, said the retailer would improve both its rate of organic growth and its profit margins during the coming 12-months.

The company said that it would invest EUR600m to improve its competitiveness. Carrefour also predicted that it would be able to make cost savings of EUR500m.

Carrefour shares gained 1.2% on the news, rising to EUR24.89 at 10.23 am (GMT).

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