Carrefour stock tumbles on results warning

13th October 2004, Comments 0 comments

PARIS, Oct 13 (AFP) - Shares in Carrefour, the world's second-largest retailer by sales after US rival Wal-Mart, were three percent lower in early trading here after the company had warned it would not meet its targets.

PARIS, Oct 13 (AFP) - Shares in Carrefour, the world's second-largest retailer by sales after US rival Wal-Mart, were three percent lower in early trading here after the company had warned it would not meet its targets.  

A half an hour after the opening of trading in Paris, the share was showing a loss of 2.91 percent at EUR 35 while the CAC 40 index of leading French stocks gained 0.51 percent to 3,707.44 points.  

Late Wednesday, Carrefour, reported third-quarter sales below most analysts expectations and warned that fierce competition and a "worsening" macroeconomic environment meant it would not meet its previously announced sales and earnings per share targets.  

The update sparked a wave of broker downgrades.  

Analysts at Citigroup Smith Barney, who downgraded their stock rating on the retailer to 'sell' from 'hold', said in a research note: "The sharp turnaround in management guidance is due to a sales short-fall and a significant increase in price investment in France, which has not driven cash sales and has resulted in a declining gross and operating margin".  

Separately, Merrill Lynch analysts lowered their recommendation to 'neutral' from 'buy' citing big cuts to forecasts and lack of sales momentum.  

On Wednesday, Carrefour reported third-quarter sales of EUR 20.314 billion (USD 25.155 billion), falling short of analysts' estimates of between EUR 20.413 and EUR 20.594 billion  

"Since we reported our results at the beginning of September, the market in France - as well as in most other European countries - has deteriorated sharply," Carrefour said.  

"Volumes are down significantly, and we see industry-wide deflation in food as well as non-food. We have contributed to this deflation more than our competitors," the company said, adding that the macroeconomic environment was "worsening".  

As a result, Carrefour now saw 2004 sales growth below five percent like-for-like, against a previous forecast of about five percent, while full-year earnings per share would not post double-digit percent growth as announced.  

"We expect nonetheless to grow EPS this year," the Paris-based company said.

© AFP

Subject: French News

 

 

0 Comments To This Article