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Retailer Carrefour says strategic overhaul on track as first half profits rise

Retailer Carrefour says strategic overhaul on track as first half profits rise
FILE PHOTO: A Carrefour logo is seen on a Carrefour Hypermarket store in Toulouse, France, March 20, 2019. REUTERS/Regis Duvignau/File Photo -
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Regis Duvignau(Reuters)
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By Pascale Denis and Dominique Vidalon

PARIS (Reuters) – French supermarket retailer Carrefour <CARR.PA> reported higher first-half profits and said it was on track with a strategic overhaul aimed at boosting earnings and tackling competition from the likes of Amazon <AMZN.O>.

Traditional retailers around the world, such as Carrefour, its French rival Casino <CASP.PA> and Marks & Spencer <MKS.L>, are stepping up their online presence to deal with the increase in purchases done over the Internet.

Carrefour, which is Europe’s largest retailer, said group operating profits rose 2.6% from the same period last year to 618 million euros (£553 million). This compared with 598 million euros in a Reuters poll of five analysts.

Carrefour had a 282 million euros improvement in cash-flow, while recurring operating profits at its competitive, key home French market rose by 6 million euros to 116 million.

Carrefour is in the middle of a plan by chief executive Alexandre Bompard to cut costs and boost e-commerce investment to increase profits and sales.

“Carrefour is showing a clear improvement in performance, half-year results are growing. This strong momentum is accompanied by an intensification of our transformation plan,” Bompard said in a statement.

Carrefour said it was sticking to the financial targets laid out in its ‘Carrefour 2022’ plan, which also includes expanding into convenience stores to cut its exposure to large hypermarket stores and having more organic products and private labels.

Those targets include a cost-reduction plan of 2.8 billion euros on an annual basis by 2020, having 5 billion euros worth of e-commerce food sales, and the disposal of 500 million euros worth of non-strategic property assets.

Last month Carrefour agreed to sell 80% of its Chinese operations to electronics retailer Suning.com <002024.SZ> for 620 million euros, and recently agreed to sell its stake in logistics property group Cargo.

Carrefour has sealed a purchasing alliance with Britain’s Tesco <TSCO.L> and it has teamed up with Spanish start-up Glovo to provide a fast home delivery service in France, Spain, Italy and Argentina.

(Additional reporting by Sudip Kar-Gupta; Editing by Jane Merriman/Michel Rose)

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