Carrefour has announced Q1 results and agreed to take full control of Norte.

Carrefour has announced a Q1 sales increase of 9.6%. It has also agreed to acquire complete ownership of Norte, its majority-owned Argentinean supermarket chain, from the Exxel Group. Investors however have been disappointed by Carrefour’s recent performance, fearing that the modest performance of its acquisitions will allow rival supermarket chains to catch up with Europe’s largest grocer.

Carrefour’s sales growth is mainly a result of the company’s positive performance in Europe (excluding France) and Asia, where sales have risen by 30.5% and 20.9% respectively. Carrefour has achieved these results mainly through acquisitions, instead of organic growth. The global integration of GB’s and Maus’ activities gave Carrefour a significant boost, as did the January sale of its frozen food business Picard Surgeles. However, the group was let down by its poor results in the Americas, where Norte operates and sluggish growth in France where the rebranding of Promodès stores has been slower and more costly than expected.

On Wednesday, Carrefour signed an agreement with the Exxel Group to transfer ownership and management of Norte entirely over to Carrefour for an undisclosed fee. Norte is the leading food retailer in Argentina, operating 139 supermarkets with a turnover of over $2 billion in 2000. Carrefour already held a major stake in Norte, with 70% of capital and 51% of voting rights, but the company hopes that taking full control will help the supermarket survive through this turbulent time in the South American food market.

It has been Carrefour’s hard discount stores, which have been performing best across the board. The hard discount stores in France saw sales rise by 11.2% in the quarter, continuing the strong growth seen in 2000. It is no surprise then that, as it assumes full control of Norte, Carrefour intends to employ its discount policy further, in an effort to turn around its relatively poor performance thus far in South America.

Last month Carrefour’s growth outlook for 2001 was poorly received by investors, causing a sharp fall in share price. On Wednesday, despite Carrefour’s seemingly positive announcements, its shares fell again by 1.27% closing at E62.2, significantly lower than the year’s high so far of E70.35 in January. Investors feel that Carrefour’s acquisitions are not contributing enough to the company’s bottom line, in contrast to rivals Ahold and Tesco, which although smaller in size appear to be reaping greater rewards from their international strategies.

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