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Last Updated: Thursday, 10 March, 2005, 13:09 GMT
Carrefour exits Japan and Mexico
Carrefour Japan
Carrefour is selling its eight hypermarkets in Japan
Carrefour, the world's second largest retailer, has announced it is selling its major assets in Japan and Mexico.

In Japan, the French retailer is selling its eight hypermarkets to local retailer Aeon for a reported 10bn yen ($96m; 71.6m euros).

In Mexico, it sold local food retailer Chedraui its 29 hypermarkets, which includes two stores planned for 2005.

The supermarket giant is looking to expand in Italy and sell non-core or under-performing assets.

Different habits

Carrefour entered Japan in 2000 but, according to the analysts, has always struggled to find the right formula to attract consumers in this market.

"Let's be honest, Japan was a short, expensive adventure for us," chief executive Jose Luis Duran said.

Japan, where consumers are known for their preference of buying whatever they need in small amounts every few days, has proved to be a very difficult market not only for Carrefour but also for rival Wal-Mart.

Despite its exit the French giant, which has more than 10,000 shops in 29 countries, said it had drawn up a proposed strategic partnership with Aeon in Japan.

Carrefour in Mexico
Carrefour is leaving the Mexican market

"We ultimately reached the decision that we need a Japanese partner to stay in the market for a long time," said Carrefour Asia's CEO Philippe Jarry.

The draft agreement will allow Aeon to use the Carrefour name in Japan, for the two groups to co-operate on some commercial activities, and for the sale in Japan of Carrefour-branded products.

Other foreign retailers that have been forced to abandon the Japanese market were France's Sephora - part of the world's largest luxury group LVMH - and British drugstore giant Boots.

Meanwhile, the French company has also announced tightened financial ties with Italy's Finiper, in which it has a 20% stake.

Carrefour said it had reached an agreement with Marco Brunelli, the main shareholder in Finiper - under this deal, Carrefour has an option to buy 31% of Finiper.

Weak in France

During the past month, in a decision welcomed by investors, Carrefour has shaken up its management in the hope of breathing new life into its flagging superstores.

The widely-trailed move saw its finance director, Jose Luis Duran, replace chief executive Daniel Bernard.

The company has reported operating profits fell last year 0.5%, to 3.234bn euros ($4.33bn; 2.25bn) from 3.251bn euros, caused mainly by a weak performance in France where sales were flat.

Net current profit, before exceptional items, rose by 2.6% to 1.662bn euros from 1.620bn euros, but net profit after exceptional items fell by 14.9% to 1.387bn euros from 1.629bn euros.

The difference was accounted for by an exceptional charge of 275m euros.

The company has announced a four point growth strategy to improve its price image, boost customer traffic in its French hypermarket business, improve profitability outside France, and accelerate growth between 2006 and 2008.

Mr Duran has told Reuters news agency that Carrefour plans to open 15 Hypermarkets in China and expand its operations in Brazil, Colombia, Indonesia, Thailand and Poland.

The issues facing Carrefour at home and abroad

Carrefour confirms board changes
04 Feb 05 |  Business
Carrefour shares rise on shake-up
03 Feb 05 |  Business

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