Deepening economic gloom has forced Europe's biggest retailer, Carrefour, to issue its fifth profit warning this year and Germany's leading independent forecasters to highlight the risk of a recession in 2012. As EU policymakers struggle to find a common solution to the sovereign debt crisis within the next two weeks, the real economy is rapidly deteriorating as confidence seeps from consumers and investors. France-based Carrefour blamed "an increasingly uncertain environment" for an expected fall in operating profit this year of up to 20%. Only six weeks ago it said the decline could be 15%, prompting analysts to suggest the group's guidance was worthless. Across the Rhine, the eight leading German economics institutes slashed their earlier growth forecast for next year from 2% to just 0.8% and warned of an even deeper downturn if there is a "credit event" in Greece or elsewhere in the eurozone. Germany grew just 0.1% in the second quarter of 2011 but the full-year result could still be 2.9% after a huge spurt in the first quarter. The IMF is forecasting 1.3% German growth next year. In France, a Reuters poll of 20 economists resulted in a growth forecast of just 1% in 2012 after 1.6% this year. In its recent budget the government forecast 1.75%. It was the poor performance of its French hypermarkets, with sales down 4.4% in the third quarter, that drove Carrefour to issue its latest profits warning. Pierre-Jean Sivignon, Carrefour's chief financial officer, said the decline in consumer sentiment had hit "discretionary" (mostly non-food) spending – down almost 10% in France – and economic conditions were likely to remain challenging.
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Friday, October 14, 2011
Deepening economic gloom has forced Europe's biggest retailer, Carrefour, to issue its fifth profit warning this year and Germany's leading independent forecasters to highlight the risk of a recession in 2012. As EU policymakers struggle to find a common solution to the sovereign debt crisis within the next two weeks, the real economy is rapidly deteriorating as confidence seeps from consumers and investors. France-based Carrefour blamed "an increasingly uncertain environment" for an expected fall in operating profit this year of up to 20%. Only six weeks ago it said the decline could be 15%, prompting analysts to suggest the group's guidance was worthless. Across the Rhine, the eight leading German economics institutes slashed their earlier growth forecast for next year from 2% to just 0.8% and warned of an even deeper downturn if there is a "credit event" in Greece or elsewhere in the eurozone. Germany grew just 0.1% in the second quarter of 2011 but the full-year result could still be 2.9% after a huge spurt in the first quarter. The IMF is forecasting 1.3% German growth next year. In France, a Reuters poll of 20 economists resulted in a growth forecast of just 1% in 2012 after 1.6% this year. In its recent budget the government forecast 1.75%. It was the poor performance of its French hypermarkets, with sales down 4.4% in the third quarter, that drove Carrefour to issue its latest profits warning. Pierre-Jean Sivignon, Carrefour's chief financial officer, said the decline in consumer sentiment had hit "discretionary" (mostly non-food) spending – down almost 10% in France – and economic conditions were likely to remain challenging.
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7 comments:
Uhh so cutting the growth expectations from 2,0% to 0,8% is a "downturn" now? Screw this, the German economy is STILL growing and unemployment is down to the lowest numbers since re-unification. Nobody in Germany is personally noticing any "crisis" whatsoever.
Wouldn't hurt if wages were rising more, though. During the last years the employers could rightfully claim "we can't raise wages now because demand is low and it would lower our competetivness even further, forcing us to lay off workers". Now that we had over a year of strong growth, employers are claiming "we can't raise wages now because the forecasts look gloomy". This can't be right, with that attitude there's never a chance of rising wages, is there?
Anyways, don't put too many expectations in the German consumer anyways, any wage increase will be either used to pay off debts or will be saved for bad times first...that's how we didn't get into this mess along with everyone else in the first place!
Look, forget Greece, ('forget' in the euphemistic Hollywood use of the word), Greece is a piddling little country in the grand scheme of things. The big fire is across the Adriatic in Italy. If tomorrow the government falls there, all bets are off for staving off 'contagion' and eventual breakup of the Eurozone. The Italian political system is a pantomime (Burlesquoni fits right in) and while before it had no effect on the course of events in other, politically saner countries, and was regarded by these as a bit of an entertainment and joke, now the joke is no longer funny. The Italian political geritocracy needs to get off its duff and do something quick before it brings down everybody. Continuous yakking and arm-waving will no longer cut it. 'Consumerism' and conglomerates like Carrefour might well become a thing of the past.
My experience of Carrefour (in Spain) is that although the quality of fish, meat and fresh fruit and vegetables is better than the neighbouring Aldi, they are significantly more expensive for basics (no surprise there) and therefore they lose out when more competitive pricing would generate more trade.
Their loyalty scheme is pretty useless, hedged around with rules which have to be met by the customers, but they seem to feel able to break themselves eg paying out every three months according to the scheme, but actually taking four months in one case, and having to spend the coupon within a short timespan or lose it. Not much use if you don't live there pretty well full time.
lets all buy government index gilts, if you can afford them in the first place that is, and loose more money in the process why not just another way of ripping off the people.... the figures don't add up and never will
CARREFOUR sends alarm bells over economy? WOW!!! What a commendable example of community spirit and care. Actually though, I think your heading is wrong. it's the CONSUMER who is sending the real ALARM BELLS telling these over-priced money hungry Giants that enough is enough.... but no-one wants to listen to us. We should boycott chains like Carrefour who only care about sending alarm bells because their profits are down. There are other less expensive places to buy the basics.
Well, the parallel between Carrefour's commercial problems and Germany's weak consumer spending is misleading and ...irrelevant. The article's aim is to highlight the fact that economy is stagnating in both France and Germany.
But let s come back to Carrefour: its difficulties are not related to the state of the French economy because its main national competitors are growing. As surprisingly as it might be, Carrefours' sales are also declining in China and its growth is slowing down in Brazil...its problems are global.
Carrefour's problems are internal: the pressures from the shareholders of course, but mostly the implementation of a new strategy initiated by his new Swedish CEO, previously working for Nestle, which is failing.
Aldi is fantastic for us. We used to shop at Sainsburys and Tesco and over a year a go we switched to Aldi full time.
On many weeks we have saved £20, and the quality of food in Aldi is virtually the same as the average in Sainsburys and Tesco.
In a year we have saved about £800 on our shopping. And we are not the only ones, Aldi, Lidl and other discounters are growing significantly in the UK.
Not having been in Carrefour for 15 years, at least, some of the commentary on here places them as Tesco - with a loyalty scheme but with uncompetitive discounted prices, using their stock range as convenience.
They need to reduce their prices - but their profits forecast does not seem tied to the general economy.
Carrefour's profits would be even lower if they discontinued their offers scam. Offers shown on the shelves do not translate to the customers bill. I have proved this time and time again by buying a promotion only to see that the price on the the receipt is the pre-promotion price. Customer services always honour the promotion price but\ never change the Computor controlling the tills. You can buy the same item a couple of days later and be overcharged again.One can only assume that this is done as a matter of company policy as they know that most shoppers never ckeck their bill, a practice certainly unbecoming of a major retailer. If you shop in Carrefour ALWAYS check your bill,and you will save a lot of money.
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