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.
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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.”
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By GlobalDataOlofsson, 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).
