In Lars Olofsson’s last full quarter as chief executive, French grocery giant Carrefour reported a 0.9% rise in first quarter sales excluding fuel, at constant exchange rates, to E22.5bn (£19bn).

The growth came predominantly from Carrefour’s emerging markets in Latin America, particularly Brazil.

Unsurprisingly, the home market of France experienced a continued revenue decline, a trend that was echoed across Europe.

The French market, where sales fell 5.8% during the quarter, will undoubtedly cause the biggest headache for incoming chief executive Georges Plassat, with France accounting for more than 40% of Carrefour’s total revenue.

A reliance on the struggling hypermarket format has been the its biggest problem in recent years, particularly during the recession. A decline in discretionary spending coupled with the growth of ecommerce has hit the performance of non-food at Carrefour’s hypermarkets.

Following the relative failure of Carrefour’s upmarket Planet format, it is expected the new chief executive will formulate an alternative strategy to downsize some stores, while at the same time boosting sales in the non-food category. It is also hoped the launch of ‘Reset’ - Carrefour’s turnaround plan for France, focusing on price cuts rather than costly promotions - will be the positive change needed.

Olofsson said: “The trends we observed this quarter and the persistently difficult trading environment confirm our determination to pursue the execution of our Reset plan in France.” However, the retailer has warned it will not be a quick fix.

In the rest of Europe the picture was not much brighter, with sales falling by 3.2%. Southern Europe was hit particularly hard, as the region continued to bear the brunt of the European debt crisis with Carrefour’s operations in some of the worst hit countries such as Greece, Spain and Italy suffering significant sales declines. In these markets non-food sales in stores open at least a year fell by 10% in the first quarter.

The picture was not all doom and gloom. Sales in Latin America rose by 8.1%. Brazil performed well with the Atacadão cash-and-carry chain exceeding expectations. Hypermarkets also began to recover in Brazil, contributing to further growth during the quarter.

Plassat certainly will certainly have his work cut out as he adapts to the changing economic and consumer landscape.

For more information contact Planet Retail on:

Tel: +44 (0)20 7728 5600

Email: info@planetretail.net