France's Carrefour stood firm on its strategy of owning its own stores on Thursday, dampening hopes of a huge property spin-off that may have lured French billionaire Bernard Arnault into buying its stock.
The world's second-largest retailer, Carrefour also defended the way the company is run a day after it was thrown into turmoil by Arnault's share purchases and by the resignation of its chairman in a separate row with its main family shareholder.
The luxury-goods tycoon's purchase of a 9.8 percent stake together with Colony Capital prompted speculation of a move to make Carrefour hive off its property portfolio, as private equity firms seek to unlock value from retailers' real estate.
"For me the control of the real estate is important, not only for Carrefour, but also for the food retail industry," Chief Executive Jose Luis Duran told reporters as the company unveiled 2006 earnings in line with market forecasts.
Arnault's move comes at a time of intense speculation about leveraged buy-outs across the European retail sector, after a private equity consortium said it was assessing a bid for Britain's number-three supermarket group, J. Sainsbury.
Retailers' attraction to private equity firms is based on releasing the value of their stores and property assets through sale-and-leaseback schemes.
Duran put a value of 15 to 20 billion euros ($19.75 to $26.35 billion) on the six million square metres of property the group owns in Europe, out of 15 million square metres it uses world-wide.
Carrefour said 2006 operating profit rose 4.6 percent to 3.274 billion euros, which included 15.9 million euros of non-recurring elements. Net profit rose 3.3 percent, and the company offered shareholders a 3 percent rise in the dividend to 1.03 euros.
Amid continued price competition and a tough market environment in France, its largest single market, Carrefour said it expected current operating profit to grow by less than sales in 2007 before catching up with them next year.
It predicted sales growth would at least match the 6.6 percent achieved last year and rise to 10 percent in 2008 if the group conducted a number of targeted acquisitions.