UPDATE 3-Carrefour keeps 2010 goals, August disappoints

* Keeps 2010 underlying profit goal of around 3.1 bln eur

* Confirms H1 underlying profit rose 7.6 pct

* Turnaround plan on track

* Europe July sales trend satisfactory, August disappoints

* CEO very pleased with European hypermarket revamp progress

(Adds CFO, CFO comments, analyst comment, updates shares)

By Dominique Vidalon

PARIS, Aug 31 (BestGrowthStock) – Carrefour (CARR.PA: ), Europe’s top
retailer, said the summer sales trend was mixed in Europe but
demand was holding up in emerging markets and confirmed it
expected operating profit to rise this year.

Tight cost control and buoyant emerging markets lifted
first-half profit by 7.6 percent, in line with guidance given in
July, while Carrefour was making headway on its plan to revamp
its hypermarkets in Europe to boost lagging sales.

Chief Financial Officer Pierre Bouchut told a conference
call that sales trends at Carrefour were “rather satisfactory”
in Europe in July but “slightly disappointing” in August while
demand was sustained in emerging markets.

The cautious comments, coupled with news of an unexpected 69
million euro one-off charge in Brazil, where Carrefour also
faces weak hypermarket sales, kept the shares under pressure.

“Although figures were in line with expectations, comments
from the CFO about the European summer sales took the shine off
and it looks as though whilst the French business may be
improving, some of Carrefour’s other key markets are
deteriorating,” said Execution Noble analyst Caroline Gulliver.

The world’s No.2 retailer by sales behind U.S. group
Wal-Mart (WMT.N: ) confirmed that it expected an underlying
operating profit of around 3.1 billion euros ($3.9 billion) this
year, having achieved 1.096 billion in the first-half.

“Our transformation plan is delivering planned results and
makes us confident of achieving our 2010 objectives,” Chief
Executive Lars Olofsson said in a statement.

Carrefour has launched a three-year overhaul plan aimed at
tackling underperformance in its main western European markets
and delivering 4.5 billion euros of savings.
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The French group, which has over 15,500 stores in 35
countries, achieved cost savings of 236 million in the first
half, nearly half the 500 million targeted for the full year.

By 1020 GMT, Carrefour shares were off 1.77 percent at 35.47
euros, having erased earlier gains.

“First-half results are in line with July 15 guidance, FY
2010 outlook unchanged and in our view it remains ‘hold’ at
best, with better value elsewhere in the sector, particularly
looking at Tesco, Morrison and Ahold,” RBS said in a note.

Retailers, particularly in developed markets, are battling
to emerge from a deep recession and worry that steps to rein in
government debt — like higher taxes and public spending cuts —
could hit consumer demand in the months ahead.

Last week, Dutch grocer Ahold (AHLN.AS: ) posted a small rise
in quarterly underlying sales in its main U.S. market, bucking
the trend in an industry which has been hit hard by fears over
the strength of the economic recovery. [ID:nLDE67O1AY]

Earlier this month, Wal-Mart Stores Inc said it would focus
on curbing expenses to boost profit this year as consumer
sentiment remains soft. [ID:nN17234410]

Analysts said the focus was now very much on Carrefour’s
plan to revamp its European hypermarkets, notably in France
where the format accounts for more than 50 percent of sales.

Olofsson told a news conference that Carrefour was “way
ahead of where we thought we’d be” on the revamp plan.

But he would not discuss costs ahead a Sept.16 investor day
that will detail the plan, which is aimed at luring back
customers who prefer to shop closer to home or in specialty

Last week, Carrefour unveiled some of the new features of
its renovated hypermarkets at one of its pilot stores in Ecully,
near Lyon, including expanded aisles, specialised beauty or
snacking areas and baby-sitting services.

CFO Bouchut said on Tuesday that Carrefour will accelerate
expansion in key growth markets like Indonesia, Brazil, Turkey
or China in the second half.

He repeated Carrefour was looking at exiting countries where
it was not among the market leaders, while seeking to expand in
markets where it was or could be a leader.

But he would not comment on reports the group was looking
to sell assets in southeast Asia.

Carrefour shares have underperformed the STOXX Europe 600
retail index (.SXRP: ) this year but trade at a higher multiple of
forecast earnings than Wal-Mart and British rival Tesco (TSCO.L: )
due to optimism about its turnaround plan.
(Editing by James Regan and David Cowell)
($1=.7861 Euro)

UPDATE 3-Carrefour keeps 2010 goals, August disappoints