↑ Scroll to top

Carrefour Cuts Dividend, Trims Store Conversions

Published: March 8, 2012 | 10:29 am
Text size: -A +A

Carrefour SA (CA), the world’s second- largest retailer, more than halved its dividend and said it would “significantly scale down” superstore conversions as it reported a decline in annual profit.
The payout for 2011 will be 52 euro cents (69 cents) a share, down from 1.08 euros in 2010, the Boulogne-Billancourt, France-based retailer said today in a statement. The average estimate of 31 analysts compiled by Bloomberg was for a dividend of 80 cents. Current operating income fell 19 percent to 2.18 billion euros, the grocer said, meeting its own forecast.

Revamped superstores, while performing better than non- converted outlets, haven’t met expectations, Carrefour said, citing “unprecedented macro-economic conditions in southern Europe” and “operational hurdles in France.” Eleven outlets will be converted in 2012, bringing the total to 92, according to the retailer, which in 2010 announced plans to change 245 of 500 superstores in western Europe to the Carrefour Planet model.
Further conversions are on hold and modification costs will be reduced before the program resumes, Chief Financial Officer Pierre-Jean Sivignon said today on a call to reporters.
The dividend cut “reflects concerns on 2012, in particular regarding the cash flow generation,” Arnaud Joly, an analyst at CA Cheuvreux, said in a note to clients. The scaling back of store conversions is “not surprising,” said the analyst, who has an “underperform” recommendation on the stock.

Fewer Promotions

Carrefour fell as much as 1.1 percent in Paris trading and was down 0.8 percent at 17.48 euros as of 9:06 a.m. Before today, the shares had risen less than 0.1 percent this year, giving the grocer a market value of 12 billion euros.
To address the challenging economic environment in Europe, the grocer said it will lower prices, offer fewer promotions and boost the number of Carrefour-branded products on shelves. In France, it will also add more so-called drive pick-up points and develop e-commerce, it said.
Carrefour this year named Georges Plassat as its fourth chief executive officer in eight years after forecasting lower profit five times in the past 18 months. The retailer has been slow to adapt to shifting consumer behavior in Europe, where shoppers are favoring local stores and online to out-of-town superstores, which account for about 40 percent of sales.
The company will target cost savings of 400 million euros in 2012 as well as a planned two-day reduction in inventories, according to the statement.

Reduced Spending

Carrefour said it will cut capital expenditure this year to between 1.6 billion euros and 1.7 billion euros from 2.3 billion euros in 2011. Spending levels will remain unchanged in emerging markets, where the grocer maintains its “strong commitment” to expanding in China, Brazil and Indonesia, Carrefour said.
The retailer also proposed a new dividend payout policy of about 45 percent of net earnings, adjusted for onetime items.
Carrefour said in January that full-year earnings declined by closer to 20 percent than 15 percent. The retailer uses current operating profit, which takes into account last year’s spinoff of the discount chain Distribuidora Internacional de Alimentacion SA as well as other items. Analysts had expected profit on that basis of 2.19 billion euros, the average of six estimates gathered by Bloomberg.
Plassat will join Carrefour on April 2 as chief operating officer and become chairman and CEO after a June 18 shareholders meeting, replacing Lars Olofsson. Turning around the company is this year’s biggest task in retail, according to Natalie Berg, global research director at Planet Retail.

bloomberg

VN:F [1.9.10_1130]
Rating: 0 (from 0 votes)
Share on Facebook Share on Twitter
More posts in category: Local Business News
  • VTB Bank Increases its Assets
  • George Soros Has Hard Words for European Union
  • Georgian Tea to be Sold in South Africa
  • Memories of the first Nasdaq 3000 in 1999