Carrefour the, world's second-largest retailer by sales, has vowed to be more aggressive on pricing after a disastrous first-half loss of nearly €250m (£222m), which was dragged down by hefty impairment charges.
This dire performance forced the French grocery giant – which is struggling to attract enough shoppers and is losing market share in France – to give warning that its full-year operating income will be 15 per cent lower in 2011 than last year.
Lars Olofsson, the chief executive of Carrefour, said it had been "weighed down by a poor performance in France" but the group also referred to its "underperformance" in Greece and Italy, which alone accounted for €516m of the €884m one-off impairment charges in the six months to 30 June. Mr Olofsson said the results were "unsatisfactory" and promised "radical and decisive" action.
While Carrefour has a presence in 32 countries and generates 57 per cent of its turnover outside of France, the group suffered a catalogue of errors on its home soil. Its hypermarkets were hit by "excessive levels of out-of-stocks during a transition phase" when it implemented changes to its strategy, processes and systems. Its margins also fell after a rise in commodity costs and fierce competition on price from rivals. As a result, Carrefours' operating income slumped by 40 per cent to €302m in France.
However, Noël Prioux, the executive director of France, said it needed to get back to the "best prices, item by item". Carrefour, which has 9,500 stores globally, posted a group net loss of €249m over the half year, following a profit of €97m over the same period in 2010.
Total sales at Carrefour rose by 2.3 per cent to €39.61bn, boosted by new stores openings and "good growth" in China and a "confirmed recovery" in Taiwan.