Sep 19, 2017
Carrefour's new boss may close hypermarket stores in France: union
Sep 19, 2017
The new boss of Carrefour could close some of the retailer’s large hypermarket stores in France as part of plans to turn around the company, a union official said.
The CEO’s plans could also include converting some Carrefour hypermarkets into franchises and introducing Sunday opening for some of them, Force Ouvriere union representative Michel Enguelz told Reuters.
Alexandre Bompard, who took over in July, said last month that he would provide details on his strategy by the end of the year after Carrefour - the world’s second biggest retailer behind Wal-Mart (WMT.N) - warned its 2017 operating profit could fall by around 12 percent.
Carrefour shares are down nearly 30 percent so far in 2017 - underperforming European rivals.
Bompard has started meeting union representatives in France, Carrefour’s most important market in terms of sales and profits.
The French business has suffered from an over-reliance on large hypermarkets, a format which analysts say is in decline as shopping habits change.
“The goal of the meeting was to touch base. Alexandre Bompard did not detail his plans but clearly said Carrefour could no longer lose market share in France,” Enguelz said.
When asked about his plans for Carrefour in France, Bompard said he did not rule out options such as turning some stores into franchises or closing loss-making stores, Enguelz said.
He said Bompard was also keen on opening French hypermarkets on Sundays and talks on this would start with union representatives on Sept. 25.
France has been gradually removing many old trading restrictions concerning Sunday shopping, with shops in tourists areas and big department stores often now opening on Sundays.
Carrefour declined to comment.
Analysts have said they want Bompard to boost the performance of the group’s French hypermarkets, which are facing fierce competition from online retailers and have been hit by price discounting from rivals such as unlisted Leclerc.
“We have consistently viewed hypermarkets as a problem format in desperate need of a solution ... The new CEO has a window to close underperforming stores, much like the new CEOs of Tesco and Morrison did after they came in,” Credit Suisse analysts said in a recent note.
Bernstein analysts said Carrefour’s problems were extensive, but a credible strategy from the new CEO would give markets hope.
The Bernstein team also said closing stores could improve results at the division, along with other possible solutions such as investment in online, a new pricing strategy, setting up franchises and selling off surplus hypermarket space.
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