Carrefour is growing, but keeps cutting

French retail giant Carrefour has seen its comparable turnover grow 1.4 % in the past year, to 84.916 billion euros. Excluding non-recurring events (such as selling the Dia chain), net profits ended at 802 million euros (+ 3.75 %).

“Carrefour is doing better”

The results were much better than expected: analysts were assuming net profit to reach between 749 and 752 million euros and a turnover decrease. While the operational profit margin in France receded from 1.9 % to 1.3 % (partly due to the growing competition and the ‘yellow vests’), it stabilised at 3.2 % in the rest of Europe. By saving costs, the group managed to compensate for the heavy competition from discounters. In Latin America, Carrefour even managed to boost its operational profit margin from 4.5 % to 5.7 %.

Last year, Carrefour sold up to 1.2 billion euros worth of food online, an impressive 30 % increase. The chain’s management is convinced the milestone of 5 billion euros is within their grasp in 2022.

Extra savings

“Carrefour is doing better, much better,” CEO Alexandre Bompard on RTL radio: “The results are both solid and encouraging” after an “intense year of changes”. Still, the group has a long way to go: the CEO wants to increase efforts further and is raising the bar on some of the goals stipulated in Plan Carrefour 2022, which he developed when he became CEO. For example, the assortment is to be reduced by 15 % before 2020 (initially: 10 %) and the number of smaller stores is to be increased by 3000 instead of 2000 before 2022. In fact, Carrefour intends to reduce the group’s total store surface by 400,000 sqm.

Since Carrefour is aiming for “a culture of operational efficiency and financial discipline”, savings will increase as well. Last year, the group saved 1.05 billion euros by cutting 5000 jobs and disposing of 273 Dia stores, among other measures. Carrefour has now adjusted its cost reduction plans to save 2.8 billion euros (instead of 2 billion) by 2020.