Carrefour reports higher profits as a revival of its European hypermarkets starts to pay off. As Sonia Legg reports, the world's second-largest retailer also plans to lift capital spending further and go ahead with a stock market flotation in Brazil.
It's been a tough few years for the world's second-largest retailer. But like the euro zone Carrefour appears to be emerging from the shadows. The French retailer's revamp of its hypermarkets is paying off - its 2014 operating profit rose by 6.7 percent - a little higher than most expected. Asia remained weak as consumption there slowed. But Carrefour's core French and European business - where it makes almost three-quarters of its sales - improved. And growth in Brazil, another key country, was robust. David Stubbs is a Global Market Strategist at JP Morgan. (SOUNDBITE) (English): DAVID STUBBS, GLOBAL MARKET STRATEGIST, JP MORGAN, SAYING: "If companies that have got through the last few years of rolling recession, a difficult credit environment, poor spending by households and weak topline revenue growth, they've done so by reducing their costs, by improving their margins and by implementing cutting edge management practices and I think you can say that for Carrefour." 2015 is the last year of a three-year revival plan. But unlike rival Tesco - the world's third-largest retailer - Carrefour has stuck to its hypermarket format and not tried to adapt to local and online shopping trends. It's possibly turning a corner now thanks to Europe's recently improved retail sales volumes and positive consumption outlook. (SOUNDBITE) (English): DAVID STUBBS, GLOBAL MARKET STRATEGIST, JP MORGAN, SAYING: "Lower oil prices have helped the bottom line, a lower euro too is helping the competitiveness of some of the business sectors and so I think the outlook for consumption is better. As for their strategy of big out-of-town parks I am not sure it's the best or worst way but it is what they know and they are sticking to their core business model." Carrefour has also acquired the discount retailer Dia recently to cash in on another trend. And it has big plans for Brazil - including a possible stock market flotation later this year.