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Lack of details on Carrefour turnaround disappoint

Lack of details on Carrefour turnaround disappoint
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Carrefour’s new boss is promising to slash costs and defend the troubled retailer’s key markets like France, Brazil and China.

However George Plassat revealed few details of his long-awaited restructuring plan.

Asked if the group had set a goal for cost reduction over the three-year period, he said: “No, action plans are better than budgets.”

He was speaking after the French supermarket operator reported first-half results that were pulled down by poor performances in austerity-hit countries such as Spain and Italy.

Plassat – a retail veteran – took over the top job in May and has been much touted as Carrefour’s potential saviour.

It is underperforming particularly in its main market – Europe.

Carrefour is the world’s second-largest retailer by revenue after the US chain Wal-Mart.

As part of its cost cutting measures,the company has just told unions that it plans to lay off as many as 600 employees in France.

It will also reduce debt as it pulls back from countries such as Poland, Turkey and Indonesia, while defending its mature markets plus Brazil and China.

Carrefour shares rose strongly on the first-half results, which beat forecasts, and held on to their gains through Plassat’s presentation, even though some investors expressed disappointment at the lack of specifics.

Euronews Paris business correspondent Giovanni Magi, said: “Inevitably, the crisis is effecting large retailers, especially in groups like Carrefour, which have a major presence in recession hit countries. Their restructuring plan includes job losses, which could lead to a strong reaction from unions here in France.”

Plassat has said he needs three years to turn around Carrefour, whose challenges include halting a fall in market share in France, where it makes 43 percent of sales, cutting debt and weathering a difficult economic climate in Italy and Spain, where it makes just under 20 percent.

First-half underlying profit fell 8.2 percent to 769 million euros, hit by weakness in French hypermarkets and in Asia.