Carrefour Names Plassat CEO After Three-Year Stock Decline Under Olofsson
Carrefour SA (CA) appointed Vivarte SA Chief Executive Officer Georges Plassat as CEO, ending Lars Olofsson’s three-year reign that saw shares of the world’s second-largest retailer fall 24 percent.
The board of Boulogne-Billancourt, France-based Carrefour approved Plassat’s appointment at a meeting yesterday. Plassat will join the company on April 2 as chief operating officer and become chairman and CEO after the June 18 shareholders meeting, the company said in a statement today.
Plassat will seek to restore investor confidence in a company that has forecast lower profit five times since announcing a 1.5 billion-euro ($2 billion) plan to remodel some of its largest European stores in September 2010. Carrefour has lost about 7 billion euros in market value since Olofsson became CEO in January 2009.
“This appointment is positive for Carrefour but there is a lot to be done to turn around the group,” Arnaud Joly, an analyst at CA Cheuvreux wrote today in a note. Joly has an “underperform” rating on the stock.
Carrefour declined 4.1 percent to 17.52 euros in Paris.
Profit has shrunk at the retailer amid a slump in sales in its domestic French market. Olofsson’s plan to reduce prices and overhaul its largest outlets failed to win over enough consumers and doesn’t address demand for convenience and shorter journeys to stores, according to Natalie Berg, the global research director at researcher Planet Retail in London.
“Rather than directing capital towards indulgent remodels, money would be more wisely spent ramping up multichannel functions such as click and collect, in-store kiosks and e- commerce,” Berg said last week.
Plassat rejoins Carrefour after 11 years at Vivarte, the Paris-based owner of the Kookai clothing brand that was acquired by private-equity firm Charterhouse Capital Partners LLP in 2007. A former CEO of French supermarket operator Casino Guichard-Perrachon SA, (CO) he ran Carrefour’s Spanish business between 1997 and 1999.
Carrefour said Jan. 19 that profit was at the lower end of its forecast range as same-store sales fell in most of Europe and in Asia, including China. Macroeconomic conditions are likely to remain challenging and uncertain, it said at the time.
Plassat “is well aware of the magnitude of the task ahead, which will require the support of all within the company,” Carrefour said.
Groupe Arnault SAS and Colony Capital LLC, which own a combined 16.02 percent of the shares and 22.14 percent of the voting rights, have been considering replacing Olofsson, people familiar with the matter said in November.
Olofsson, 60, has said he tried to do “too much, too quickly” in betting that a new format with lower prices and more own-label products would boost sales and profit through 2015. In a revision to his plan, the grocer said in August it will step up smaller store expansion, focus on selective price investment and increase the number of own-branded items. Carrefour will also cut capital expenditure in Greece and Italy.
While Olofsson spun off all of the discounter Distribuidora Internacional de Alimentacion SA on the Madrid stock exchange in July, he shelved a plan to list 25 percent of Carrefour’s property assets in Europe following opposition from investors, unions and squabbling among management. The CEO also presided over an aborted proposal to merge Carrefour’s Brazilian unit, whose value was written down by 550 million euros in 2010, with Cia. Brasilieira de Distribuicao Grupo Pao de Acucar.
In October, Knight Vinke Asset Management LLC, which owns about 1.5 percent of Carrefour, called for the grocer to split Olofsson’s role of chairman and CEO and appoint an independent chairman, citing “serious governance issues.” In an open letter to Carrefour’s shareholders, employees and board, Knight Vinke also recommended the board not bring in an outsider, saying Carrefour has qualified candidates in its ranks.
Carrefour’s European labor committee rejected the proposal, saying it was aimed at dismantling the retailer.
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