Despite a record set of
HI results, Groupe Carrefour has decided to trim investment in its Internet
strategy and seek partnerships to spread the risk of online ventures. Carrefour,
which merged with Promodès last year to become the world’s second largest
retailer after Wal-Mart of the US, had originally set aside some €1bn to
grow its online business. Chairman Daniel Bernard has now reduced this to €600-700m,
which will halve forecast losses from online activities to approximately €25m
this year. Bernard is also said to be keen to find a number of partners rather
than just a single source of financial backing for online ventures.
Meanwhile, Carrefour has
decided to withdraw from Hong Kong, where it operates four hypermarkets. The
group has been unable to find new locations on the cramped island suitable for
developing its hypermarket portfolio, and has decided to dispose of its existing
stores and seek market share elsewhere. Local investors will buy the four stores
as of 18 September this year, the group said. Carrefour’s remaining Asian operations
include stores in Malaysia, Indonesia, Singapore, Thailand, Korea, China and
Taiwan.
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The news came as Carrefour
reported a robust set of first half results. The group beat forecasts to post
net attributable profits worth €277m in the half, up 10.7% from the same
period last year. This was generated on pre-tax turnover up approximately 28%
on a pro-forma basis to €30.7bn from €24.03bn in 1999.
The group confirmed its
growth estimates for the full year, which forecast a 20-25% sales increase.
Operating profit is expected to rise by 35-40% and net pre-exceptional profit
by 20%.
This strong set of results
reflect the successful integration of Promodès, and will ease market
concerns that merger costs would prove a major setback in the short to medium
term. In fact, Carrefour financial director Hervé Defforey told a news
conference yesterday that the merger costs would be slightly lower than originally
forecast. The costs have been revised down from FF1.5bn to FF1.3bn, with FF800m
coming in the first year.
|
2000
|
1999
proforma |
|
| Net attributable profit |
277
|
266
|
| Net profit before exceptionals |
302
|
273
|
| Sales |
30,681
|
24,029
|
| Operating profit (EBIT) |
831
|
608
|
So the worst is over. As
investors breathe a sigh of relief, market analysts feel that Carrefour is well
on the way to securing its place in the global retail superleague.
For news on French retailers’ bid for international expansion, be sure to check
out next week’s Feature of the Week.
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