Carrefour to Cut Jobs as New CEO Plassat Seeks to Revive Grocer
Aug. 30 (Bloomberg) -- Carrefour SA plans to cut as many as 600 administrative jobs in France as part of a three-year plan formulated by Chief Executive Officer Georges Plassat to turn around the world’s second largest retailer.
The redundancies will be voluntary and are “essential,” Plassat, 63, said at a presentation in Paris after the Boulogne Billancourt, France-based company reported a smaller-than- expected decline in first-half profit that boosted the shares.
Carrefour will also review businesses in markets such as Poland, Turkey and Indonesia, where local chains are better placed, said the CEO, who took over at the helm from Lars Olofsson in May. The retailer this week announced plans to exit Singapore, where it has two stores, by the end of the year, after agreeing to sell its Greek business to its local partner.
“We can’t spread ourselves too thin,” said Plassat, calling for “vigilant” cost control across the business. Carrefour needs to generate cash flow and reduce both the amount and the cost of debt, he said.
The stock rose as much as 12 percent, the most in more than two decades and the biggest gain in the Stoxx 600 Index, after Carrefour said recurring operating income fell to 769 million euros ($965 million) from 838 million euros. The median of 10 analysts’ estimates compiled by Bloomberg was 705 million euros.
Plassat is seeking to revive the retailer as Europe’s debt crisis weighs on consumer spending and it struggles to attract shoppers to its largest stores. His plan also includes giving more control to store managers, focusing advertising spending locally and online, and maintaining low prices on food, he said.
“The past is behind us, we need to look ahead,” the CEO said, adding that the company has “all the ingredients” to succeed. He declined to provide financial targets.
Carrefour, which has lowered its outlook for profit five times in the past two years, remains comfortable with consensus estimates for full-year earnings before interest and tax of as much as 2.09 billion euros, excluding Greece, Chief Financial Officer Pierre-Jean Sivignon said on a call to reporters.
The retailer has given “a solid first-half beat,” James Grzinic, an analyst at Jefferies International Ltd., wrote in a note. “In the context of a tough sales environment, solid progress on costs has limited margin attrition.”
Recurring operating income advanced 10 percent in Latin America and fell 4.1 percent in Asia because of wage inflation, Carrefour said. Profit declined 32 percent in Europe, excluding France, suffering from weakening economies, especially in the southern part of the region.
Carrefour, which in March halted a 1.5 billion-euro plan to remodel some of its largest European stores, remains committed to businesses in mature markets, Plassat said. The value of its operations in Brazil and China isn’t fully realized, he said.
The retailer is “in good shape” in China and has “no worries” amid an economic slowdown there, Plassat also said.
Carrefour shares were up 11 percent at 17.56 euros as of 3:51 p.m. in Paris, the highest price since April 4. The Stoxx 600 Index fell 0.4 percent and the CAC Index slid 0.2 percent.
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