Carrefour warns on profit - again

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Carrefour warns on profit - again

Carrefour warns on profit - again
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Carrefour has issued its fourth profit warning in as many months as cash-strapped shoppers spend less.

Europe’s biggest retailer said it expects operating profit this year to fall by up to 20 percent; previously it had predicted a 15 percent decline.

The news increases doubts about the French group’s turnaround plan.

It is battling to reverse years of underperformance in its main western European markets.

The latest warning comes after several strategy U-turns and is a fresh blow to the credibility of chief executive Lars Olofsson.

He has so far has retained the backing of the group’s powerful top shareholder Blue Capital — an alliance between French luxury tycoon Bernard Arnault and US investor Colony Capital.

A Blue capital spokesman would not comment on recent speculation that Olofsson may be running out of time.

A source close to the matter said the alliance understood the turnaround, notably in France, could not succeed overnight.

In a call with analysts, new finance chief Pierre-Jean Sivignon blamed the warning mainly on worsening trading conditions in Europe, although he also spoke about a drop in discretionary spending in China.

European retailers are struggling in their home markets with shoppers suffering from higher prices, subdued wage growth and government austerity measures.

On Wednesday, smaller French retailer Casino also reported slower growth in France but offset that with a strong performance in emerging markets.

Carrefour is suffering more than most because it makes the bulk of its sales in hypermarkets, which are losing out to specialist stores in mature western European markets.

It has also admitted mistakes, such as raising prices in France before rivals such as E Leclerc and Intermarche. In August it announced a new drive to cut prices.