By Christina Passariello
PARIS-- Carrefour SA on Wednesday showed signs that Chief
Executive Georges Plassat's attempts to turn the French retailer
around are bearing fruit, as it posted robust growth in full-year
profit.
The company said net profit for 2013 increased more than sixfold
to EUR949 million ($1.30 billion), from EUR150 million a year
earlier. Operating profit grew 5.4% to EUR2.24 billion, though
sales excluding taxes declined 1.0% to EUR74.89 billion.
"Carrefour recorded strong growth in a difficult environment,"
Chief Financial Officer Pierre-Jean Sivignon said on a conference
call.
The French supercenter operator, which jockeys with Tesco PLC
for the title of the world's No. 2 retailer behind Wal-Mart Stores
Inc., posted its strongest sales growth in France and Spain in
several years.
But earnings were dented by weak currencies abroad, especially
in Latin America. Excluding foreign-exchange fluctuations,
operating profit would have risen by 9.8% last year and sales 2%,
Carrefour said.
The results were in line with J.P. Morgan's estimates, said
analyst Jaime Vazquez. Though Carrefour's outlook contained "little
new or unexpected," he saluted the company's plan to clean up its
organization in its home market.
Carrefour shares were up 1.5% in early trading, making the
company the leading gainer in Paris's blue-chip CAC-40 index.
Two years ago, Carrefour brought in Mr. Plassat to turn around a
slumping business with yo-yoing prices and unwieldy costs. Last
year, his first full year in command, he showed a steady hand in
reducing price promotions, which cost the company a lot of money
and did little to improve customer loyalty or Carrefour's price
image. Instead, he focused on everyday low prices.
Mr. Plassat's strict control of costs raised Carrefour's
operating margin in countries such as France and Spain last year.
The company began implementing an overhaul of its supply chain,
which could lead to further cost gains as it reduces wasted
inventory.
At the same time, Mr. Plassat is spending some money. Last year,
Carrefour began renovating stores in France to boost efficiency.
The program will continue this year and spread to Spain and Italy,
two of Carrefour's biggest European markets. Carrefour recently
bought dozens of shopping centers that house its supercenters in
France, Spain and Italy, a move that will allow it to accelerate
its renovation program.
Carrefour is also doubling down on emerging markets. It opened
20 new supercenters in China last year, where competition has
intensified and Carrefour's growth waned. The company said it will
spend up to EUR2.5 billion this year on remodeling and opening
stores.
"We will relaunch our expansion beyond the countries of China
and Brazil, " Mr. Sivignon said. "The group continues to invest in
its future and its growth."
Write to Christina Passariello at
christina.passariello@wsj.com
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