Carrefour reassures investors and keeps targets
PARIS (Reuters) - Carrefour (CARR.PA) bucked the sliding trend in the fortunes of European retailers on Friday when it stuck to its 2008 business forecasts and met key profit expectations for the first half despite consumer spending fears.
The world's second largest retailer behind U.S. giant Wal-Mart (WMT.N) posted first-half operating profit up 5.5 percent, lifted by strong performance in its Latin American growth markets, helping to send its shares up as much as 8 percent.
Investors had turned the spotlight on France's biggest store chain, which issued a profit warning in June, after earnings from Dutch retailer Ahold (AHLN.AS) and French rival Casino (CASP.PA) disappointed on Thursday, hitting the whole sector.
But relief that Carrefour was not, at least for the time being, further trimming its forecasts for the rest of the year prompted a rebound in share prices in a flat market on Friday.
Oddo Securities analyst Nicolas Champs said that the share price had "reacted positively because some investors were reassured by the fact that Carrefour confirmed its profit objectives."
The group's operating profit rose 5.5 percent to 1.404 billion euros ($2.07 billion), in line with an average forecast of 1.401 billion euros in a Reuters poll of 11 analysts.
Carrefour shares were up 6.62 percent at 35.93 euros at 9:27 a.m. EDT while Casino gained 2.8 percent and Ahold 2.2 percent.
"NO FURTHER DETERIORATION"
Chief Executive Jose-Louis Duran said earlier that although the economic environment remained difficult, "we do not see any further deterioration" compared with July.
"We have a solid (business) model whatever the environment," Duran told a news conference.
He added Carrefour had the necessary means "to ensure its competitiveness and continue its expansion" and the group's sales and promotions are expected "to gain back the market share we have lost in the first half."
With consumer confidence plummeting and shoppers switching to hard discounters like German-owned Lidl and French rival, Casino's Leader Price unit, Carrefour too is hoping to follow suite by opening more hard discount stores in what it called a "major development trend" for the group.
Carrefour intends to boost its own-branded products, which are sold for around 30 percent less than commercial brands.
Carrefour is hoping that its price and cost reduction action plan for France, where it saw flat first-half sales, will help it ride out weakening consumption in Western Europe and put the group back on track for next year.
"The action plan will allow us to achieve our objectives and to start 2009 in the right way," Duran said.
(editing by John Stonestreet)
