Carrefour burdened by tough French market

French grocery giant Carrefour has reported sales up 2.6 per cent to Eu35.4 billion (£24.23 billion) for the first half of this year, reversing a first-half decline in sales last year. Carrefour's EBITDA was down 0.9 per cent to Eu2 billion (£1.37 billion).

However, the retailer's results were marred by a poor performance in its home market.

The headline figure papers over a sales decrease of 1 per cent and a 14.7 per cent decline in Carrefour's 'activity contribution' in its domestic market, France.

It was the start of this decline that led to former chief executive officer Daniel Bernard's replacement by ex-Marks & Spencer supremo Luc Vandevelde and former Carrefour Spain head José Louis Duran last year.

By contrast to its dismal French performance, sales in Europe, excluding France, rose 5.6 per cent and sales soared 11.1 per cent in Asia, where Carrefour is expanding rapidly in China.

Despite the poor domestic results, Carrefour said transactions in France rose 0.3 per cent in Q1 and 1.4 per cent in Q2, reversing a 2 per cent decline in the first half of last year.

Food market share rose 0.2 per cent, with all three formats - Carrefour hypermarkets, Champion supermarkets and Dia discount stores - achieving gains. This is the first cross-board improvement in market share since 2000.

Carrefour is continuing with plans for accelerated growth, with about 15.1 million sq ft (1.4 million sq m) of space to be added by the end of this year, through store extensions and acquisitions. From next year, the company is planning to speed up organic growth.

Carrefour has divested operations in Japan and Mexico in recent months as it focuses on its European and Asian markets. The company has also been the subject of speculation that it would be taken over by global number-one retailer Wal-Mart.