A big profit warning from Carrefour – the fifth profit so far this year from the French group. Europe’s largest retailer said its profits this year will slump 15 percent.
It is cutting prices to try to recover lost market share and says it is battling an “increasingly challenging” economic environment.
It also reported an unexpected first-half net loss, with 884 million euros of one-off charges, mainly linked to its Italian business.
Carrefour is the world’s second biggest retailer behind US group Wal-Mart with more than 9,500 stores in 32 countries. It has conceded it has made mistakes, such as raising prices in its main French market ahead of rivals.
The group reported a well-flagged 22 percent drop in first-half current operating profit to 772 million euros. It pledged to improve its competitive position, but also indicated this would hit earnings in the short-term.
“We have taken the decision to favour sustainable value creation over short-term gains,” Chief Executive Lars Olofsson said, adding the group would prioritise price cuts over promotions.
Olofsson is under pressure after launching a three-year turnaround plan in June 2009, which has so far shown few lasting benefits.
Carrefour’s shares have plunged 40 percent this year, hitting a more than 10-year low.