December 30, 2011 1:15 pm

Horrible year for underperforming Carrefour

If one profit warning is a tragedy, the second a farce, what can be said about the fifth? Carrefour, the French retailer, issued five profit warnings this year, contributing to an annus horribilis in which its share price ended the year almost 40 per cent lower than it was at the start.

The shares have woefully underperformed Walmart of the US, the only global retailer larger than Carrefour in terms of sales, and Tesco, its much smaller UK rival.

Carrefour’s disappointing operational performance, in which it failed to increase appreciably its share of the market in its French home base, was compounded this year by a failed Brazilian merger and a controversial strategic U-turn on spinning off part of the property division.

The U-turn contributed to the resignation of highly regarded deputy chairman Jean-Martin Folz.

Carrefour’s dominant shareholders, Colony Capital of the US and Groupe Arnault, the investment arm of French luxury tycoon Bernard Arnault, which together own 16 per cent, in 2008 charged Lars Olofsson, a former senior executive at Nestlé, with turning round the underperforming retailer.

The two are sitting on large paper losses having eyed Carrefour as a lucrative investment opportunity when they bought at €47-€51 a share in 2007. The shares now trade at €17.

But the shareholders’ constant interference and pressure has not helped. All eyes are now on Mr Olofsson, whose third anniversary as chief executive falls on Monday, to see whether he will remain in the job and whether Carrefour’s performance can be boosted in 2012.

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