Cost-cutting measures cause record loss at Carrefour Belgium

Carrefour Belgium has suffered a record 55.6 million euro loss last year, as costs for a major restructuring mounted. The hypermarkets specifically are still in a terrible shape.

Structurally loss-making

Despite a net profit of 70 million euros in 2017, Carrefour Belgium engaged in a huge restructuring process that cut 1,012 jobs and resulted in a number of store closings. The company paid a price for that: last year, its turnover continued to go down and its losses amounted to 55.6 million euros, as the severance packages alone cost 110 million euros. Moreover, the results of the restructuring will weigh down the 2019 results as well, Belgian business newspaper De Tijd says: the last lay-offs and store closing (Genk) were only executed this June. dat de omzet in België blijft dalen.

Carrefour’s major weakness is its hypermarkets, who have been leaking money for years and according to management, results are still deteriorating. Twenty of the forty hypermarkets are losing money as consumers have changed their shopping habits: non-food is often ordered online and food is preferably bought at discounters (such as Aldi, Colruyt or Lidl), while smaller proximity stores gain market share for ’emergency groceries’.

Expansion plans

The French chain’s Belgian branch is trying to change its course, but these attempts cost time and money. Several hypermarkets have already been fitted with a new concept, including more room for fresh produce, organic products and foodservice. The room for non-food is limited, store organisation revisited and self-scan check-outs add to lower costs. Moreover, external partners can get shop-in-shops, like para-pharmaceutical chain Medi-Market… but all these changes will take some time to take positive effect.

More focus will also go to the smaller store formats (Market and Express) and the newly opened Carrefour Bio. In the near future, Carrefour wants to open up to thirty stores per year – but others may still need to be closed. Last year, this resulted in a net result of eight more stores, raising the store count to 794.