PARIS: Carrefour, Europe's No.1 retailer, issued its fourth profit warning in as many months on Thursday, providing further evidence that cash-strapped shoppers are becoming even more cautious against an uncertain economic backdrop.
The French group, battling to drive through a turnaround plan to address years of underperformance in its main western European markets, said it expected 2011 operating profit to fall by up to 20 percent, compared with about 15 percent previously.
The world's second-biggest retailer by sales after US group Wal-Mart made the prediction after it eked out a 0.3 percent gain in third-quarter sales to 22.8 billion euros ($31 billion) as robust growth in emerging markets barely offset weak sales in France and Western Europe.
Quarterly sales were broadly in line with a forecast of 22.74 billion euros in a Reuters poll of 12 analysts.
"An increasingly uncertain environment is not a good recipe for having a high level of confidence in the numbers for 2012," said RBS analyst Justin Scarborough.
European retailers are struggling in their home markets as shoppers are hit by higher prices, subdued wage growth and government austerity measures.
On Wednesday, smaller French retailer Casino reported slower growth in France but offset that with strong growth in emerging markets.
FRENCH HYPERMARKET BLUES
In France, which accounts for about 40 percent of group sales, Carrefour reported a 4.6 percent fall in sales at hypermarkets open at least a year, excluding fuel. The forecast was for a 4 percent drop.
That was worse than a second-quarter decline of 1.7 percent and included a 9.6 percent plunge in underlying sales of discretionary non-food goods, highlighting the extent to which shoppers are cutting back on non-essential purchases.
Carrefour tied part of the decline in French hypermarket sales to an initial impact of a new action plan it launched that entailed fewer promotions and more longer-term price cuts.
Elsewhere in Europe, austerity and economic uncertainty weighed on consumer sentiment in Spain and Italy, while Belgium confirmed its rebound.
Emerging markets remained sources of growth, however, with sales in Latin America rising 10.2 percent at constant exchange rates.
Carrefour is suffering more than Casino because it runs more hypermarkets. 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.
Recognising the challenges for its hypermarkets Carrefour has set out an ambitious plan to reinvent the format last year with the new "Carrefour Planet" stores that drop the commitment to sell everything under one roof in favour of a smaller number of specialist areas like fresh food and baby foods.
Carrefour said the roll-out of the Carrefour Planet was on track with 50 stores in Europe open at end-September and an unchanged target of 82 stores by year-end.
Carrefour shares have lost 42 percent this year, lagging a 16 percent decline for Casino and a 10 percent drop in the STOXX Europe 600 retail index.
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