Strong profit growth at Carrefour

French distribution group crossroads saw its sales and profits improve in 2021, mainly thanks to a strong performance in the domestic market. In Belgium, the distributor pays the bill for heavy logistical problems.

Armed against inflation

Despite the partial relaxation of the corona measures for the hotel industry, the food retail trade is still on a roll. After Ahold Delhaize published a good balance sheet on Wednesday morning, Carrefour also published solid results: comparable sales increased by 2.3% in the 2021 financial year, to 81.2 billion euros. Operating profit increased by 7.7%, and this after an already very successful 2020 financial year.

For CEO Alexandre Bompard, the good figures confirm the soundness of his strategic plan. The distributor is gaining market share in all strategic countries and the digital strategy is also bearing fruit: online food sales have increased by more than 20%. Carrefour achieved its goal of opening convenience stores a year ahead of schedule. The cost-cutting plan brought in 930 million euros in 2021, and by 2023 the company wants to have saved a total of 2.7 billion euros. In this way, the group is well armed against rising inflation.

Problems in Belgium

On the French domestic market, the distributor posted growth in all segments. Market share gained 2 basis points, e-commerce grew by 19% (18% in food). Carrefour also notes an improvement in other European countries. Profitability is improving in all countries, except in Belgium, where comparable sales fell by 4.2% over the year as a whole – and even by 6.8% in the fourth quarter.

Over the past two years, performance in Belgium has remained solid, with comparable growth of 4.1%, points out Carrefour. The decrease in the second half is mainly due to serious logistical problems at a subcontractor. With that, the retailer refers to the strikes at Kuehne+Nagel, which wishes to close its distribution center in Nivelles. Since late September, the retailer has been struggling with empty shelves, and so far not all supply issues have been resolved. In addition, the biggest franchisee in Belgium is not doing well either: Mestdagh Group ends its exclusive partnership with Carrefour by 2023 after restructuring efforts failed to yield sufficient results.