The new chief executive of Carrefour, Georges Plassat, has said it will take around three years to turn the company around as it looks to focus on reducing debt and overhead costs as well as exiting non-core markets.
Plassat was speaking publicly earlier this week, for the first time since joining the French retail giant last month, at the annual general meeting of shareholders.
Plassat, who took over from Lars Olofsson, said Carrefour faces tough times ahead given the weak economic climate.
“Have no illusions, there will be headwinds … I cannot commit to short-term promises. It will take three years to relaunch the engine. You need three years to achieve anything that is solid.”
He continued: “The main origin of Carrefour’s difficulties is the pace of its development. For 15 years, the group has been racing after the cash necessary for its development. We need to restore the group’s financial capacity in order to develop it.”
The chief executive said he would look to further reduce the group’s global footprint and improve the efficiency of its stores as he seeks to bolster profitability.
He added the company had no intention of leaving Brazil or China for the time being but said it would not be able to retain a presence in all of its current global locations and hinted that it might exit Turkey, where Carrefour has a presence through a joint venture with Sabanci Holdings.
Since joining Carrefour, Plassat has already taken actions to restructure the company’s operations. He has revamped the executive committee, divested its 50% stake in its Greek joint venture operations and bought Argentinian discount supermarket chain Eki.
The retail giant has had a tumultuous 18 months, which has included a series of profit warnings and shareholder dissent over its strategy amid a plunge in its share price.
Profits and sales fell in 2001 and in April, the group booked a drop in first-quarter sales, hit by weakness in its French hypermarkets and a “difficult” trading environment in Europe.
Plassat is expected to disclose details of his strategy for the European retail giant at the group’s first-half results in August.