How France’s retail king reversed course to make money

The world’s second-largest retailer is going against conventional wisdom, and it seems to be paying off.  Carrefour, the French retail giant, recently axed (French) a good portion of its operations abroad—in Greece, Singapore, Colombia, Malaysia, and most recently, in fast-growing Indonesia—and used money from the proceeds to pay down its debt, invest at home, and reduce its international presence to just two key markets—Brazil, and China.

French management consultants and business press have been clamoring that global markets represent retailers’ best shot at growth, but Carrefour seems to be doing quite well by narrowing its focus.  The retailer’s foreign exits were in crowded markets, such as Poland, where eight competitors all had roughly the same market share.  In Brazil, on the other hand, Carrefour is the second largest retailer after Pao de Acucar, which is owned by another French retailer, Casino.

Carrefour’s stock jumped almost 7% today on news that total sales rose 2.1% in the last three months, compared with a year earlier, with revenue rising 1.3% in France, which now accounts for 40% of the company’s sales.  In addition to paying off debt, Carrefour used some money from its sale of foreign assets to expand its fresh food operations, which have proved popular with customers.

Last summer, Georges Plassat, Carrefour’s CEO, said he would focus on strategy at earnings conferences and avoid droning on about numbers and budgets, stating that “action plans are better than budgets.” Expressing his desire to renew the retailer’s ties with France, Plassat explained that the company would stop using English spellings (such as Carrefour Planet, without an “e”) and urged executives to write their emails in French, rather than English.

It was only five months ago that Plassat unveiled Carrefour’s plans to withdraw from several international markets, pay down debts, and cut costs.  Already, the strategy seems to be showing results.



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