Carrefour issues profit warning

Europe's largest retailer, Carrefour, warned full-year profits would slump 15 percent as it cuts prices in a bid to reverse market share losses in its home market and elsewhere in Europe.

Carrefour also unveiled a well-flagged 22 per cent fall in first-half operating profit on Wednesday and cautioned that the economic climate was "increasingly challenging."

Carrefour, the world's No. 2 retailer after Wal-Mart Stores , said it expected trends in Europe to continue "broadly unchanged."

Analysts on average were expecting full-year recurring EBIT to drop between 11 and 15 per cent to around 2.3bn to 2.4bn euros (£2.13bn).

Carrefour shares have plunged 40 per cent this year, hitting a more than 10-year low of 16.675 euros earlier this month, after a string of profit warnings tied to French underperformance and strategy U-turns, including the collapse of a deal in Brazil.

First-half operating profit fell 40 per cent in France alone, while weak Western European markets, notably Greece and Italy, also outweighed a better performance in emerging markets.

Carrefour last month admitted it made a tactical mistake in raising its prices before French rivals such as E. Leclerc and Auchan, who did not follow Carrefour's lead.

Following a review conducted by Noel Prioux, the group's new head of France, Carrefour said it was deploying a new commercial strategy in France to "regain competitiveness and traffic in its hypermarkets" and adapting to "an increasingly challenging economic environment."