Carrefour to step up spending on stores in Europe and China

[PARIS] Carrefour, the world's second-largest retailer, said on Thursday it would step up investments to renovate and open stores this year to cement its turnaround in Europe and revive weak sales in China.

The French company, which scored its fourth straight year of revenue and earnings growth, also said it was waiting for the right time to float its Carmila property unit on the stock exchange.

Europe's biggest retailer proposed raising its 2015 dividend by 2.9 per cent to 0.70 euros a share after operating profit rose 2.4 per cent to 2.45 billion euros (S$3.7 billion), in line with a Thomson Reuters poll forecast. "In 2016 the group will continue opening stores in its different formats, notably in convenience, at a sustained pace,"the company said in a statement.

Carrefour said it would invest between 2.5 billion euros and 2.6 billion euros in 2016 on renovating and expanding stores, up from 2.4 billion last year.

Carrefour, the world's second-largest retailer after Wal-Mart, has suffered from its reliance on the hypermarket format, which it pioneered, as customers shift to local and online shopping.

In response the company, which makes about three-quarters of its sales in Europe, has cut prices and costs, accelerated expansion into convenience stores, refreshed stores and given greater autonomy to managers, beginning in France.

Operating profit rose 33.4 per cent in Europe, excluding France, driven by recovery in Spain and Italy.

Latin America was boosted by a strong sales performance in Argentina and in Brazil, its No.2 market, accounting for about 14 per cent of sales, where Carrefour, unlike French rival Casino, is proving resilient to an economic downturn.

This countered an operating profit decline of 6.4 per cent in its biggest market of France, which reflected the integration of recently acquired Dia stores and a rise in taxes on larger commercial spaces. Excluding these factors profit rose 1.8 per cent in France.

China, which makes 5 per cent of sales, remained a weak spot amid slowing consumption and Carrefour said the repositioning of its model in China was one of its priorities. Carrefour is pursuing a plan there to expand in e-commerce and convenience stores and open logistics centres to cut costs.

Asked about future plans to float real-estate division Carmila, which has shopping malls in France, Spain and Italy, Mr Sivignon said: "Nothing new. It's part of the scenario. We are waiting for the right moment".

Carrefour has a 42 per cent stake in Carmila. Several analysts estimate Carmila is worth at least 4 billion euros.

REUTERS