Carrefour Leaves Asia Just After Turning To Profit

Carrefour is the largest retail group in Europe and world’s number two, after U.S. group Wal-Mart Stores Inc. Carrefour operates a whopping number of 15,500 hypermarket stores, supermarket, hard discount stores and neighborhood store and is present in 32 countries.

Carrefour S.A. is a French international hypermarket chain. Headquartered in Levallois-Perret, France,  Carrefour is the largest hypermarket chain in the world in terms of size, the second largest retail group in the world in terms of revenue and third largest in profit after Wal-Mart and Tesco. Carrefour operates mainly in Europe, Argentina, Brazil, China, Colombia and in the Dominican Republic, but also has shops in North Africa and other parts of Asia. Carrefour means “crossroads” in French.

Carrefour shop locations around the world in 2007

The first Carrefour store opened on June 3, 1957, in suburban Annecy near a crossroad (thus came the name: carrefour in French). The business was first started by Marcel Fournier, Denis Defforey and Jacques Defforey and grew into a chain from this first sales outlet. In 1999 it merged with Promodès, known as Continent, one of its major competitors on the French market.

Marcel Fournier, Denis Defforey and Jacques Defforey had attended several seminars in the United States led by “The Pope of modern distribution” Bernardo Trujillo, who influenced other famous French executives like Édouard Leclerc (E. Leclerc), Gérard Mulliez (Auchan), Paul Dubrule (Accor), and Gérard Pélisson (Accor). Their slogan was “No parking, no business.”

The Carrefour group pioneered the concept of a hypermarket, which is both a large supermarket and a department store under the same roof. They opened their first hypermarket on June 15th 1963 in Sainte-Geneviève-des-Bois, near Paris in France.

In April 1976, Carrefour launched a private label called Produits libres (free products — libre meaning free in the sense of liberty as opposed to free of charge)a  line of fifty foods, including oil, biscuits (crackers and cookies), milk, and pasta, sold in unbranded white packages at substantially lower prices.

In recent years, Carrefour has left the markets in Japan and South Korea to focus on larger markets and with a higher growth rate, countries like India. Like other large distribution groups in Europe and the U.S., Carrefour has suffered from difficult economic conditions.

Carrefour Group, the largest distribution group in Europe, plans to sell operations in Malaysia, said Monday, a ministerial official, after vivid speculations that the French group will give up operations in Singapore and Thailand and completely leave the market in Southeast Asia.

Marketing and Communication Director at Carrefour, Low Ngai Yuen, refused to make any comments.

However, an economist – head of the research firm RAM Holdings, Yeah Kim Leng, says that Carrefour intent to leave the South Asian market is obvious.

Last month, The New Straits Times newspaper published an article that Carrefour has placed a price of around one billion dollars for its divisions in Malaysia, Singapore and Thailand.

The French retailer Carrefour SA, in the first half of 2010, registered a net profit of 67 million euros (85 million dollars), compared with losses of 48 million euros in the same period of 2009 due to the significant increase in market share prices on its home market.

In Europe, sales fell by 3.1 percent at a constant rate and were therefore affected by the restructuring activities undergone in Belgium and by the economic situation in Eastern Europe. The French company’s revenue in the period of January-June 2010 increased by six percent to 43.73 billion euros.

Meanwhile, operating profit was 1.1 billion euros, up 7.6% from the first half of last year, reports Bloomberg.

According to Lars Olofsson, chief executive officer (CEO) of Carrefour, the company will achieve its objectives for 2010.

In turn, Pierre Bouche, chief financial officer, said during a conference that sales in July and August were satisfactory.

Representatives of the group expect an operating profit of 3.1 billion euros this year, compared with EUR 2.8 billion, as realized in 2009.

Carrefour revenue increased by 6% in the first half, to 43.7 billion euros. They were affected by weaker sales in Europe and Brazil, as well as costs for closing some stores in Belgium.

In 2009, Carrefour has total net sales of 85.96 billion euros (108.25 billion dollars), of which 7.6 percent were made in Asia, Latin America and 13.7 to 35.7 percent in Europe, excluding France.

And now, after all the speculation, major retailers in the UK and Japan, together with local operators, are fighting to take over operations of Carrefour in South-East Asia, says an article published Thursday in the ‘Financial Times’.

British group Tesco, the world’s third largest retailer after Wal-Mart and Carrefour is among the ten bidders for Carrefour’s assets in the region, the 61 stores in Malaysia, Singapore and Thailand, says ‘Financial Times’. Also the Dairy Farm retail company in Singapore and the French retailer Casino are in the race, yet the U.S. giant Wal-Mart does not seem interested in expansion in Asia.

Japanese financial newspaper ‘Nikkei’ claims that Aeon Group of Japan is interested in taking over operations of Carrefour in South-East Asia to offset the domestic decline. Aeon acquired Carrefour operations in Japan in 2005, five years after the French group entered the Japanese market.

According to the same article, Carrefour does not intend to leave the Chinese market, which represents 70 percent of the group’s stores on the Asian market. Moreover, Carrefour plans to remain in Indonesia and Taiwan markets.11