PARIS (Reuters) ? Carrefour, Europe's No.1 retailer, issued its fourth profit warning in as many months on Thursday, adding to signs cash-strapped shoppers are cutting back and increasing doubts about its turnaround plan.
The French group, battling to reverse years of underperformance in its main western European markets, said on Thursday it expected 2011 operating profit to fall by up to 20 percent, compared with about 15 percent previously.
At 0729 GMT, its shares were down 3.6 percent at 17.3 euros, the biggest fall by a European blue-chip stock, as analysts said a deteriorating economic backdrop could derail its drive to improve performance.
"An increasingly uncertain environment is not a good recipe for having a high level of confidence in the (profit) numbers for 2012," said RBS analyst Justin Scarborough.
European retailers are struggling in their home markets as shoppers are hit by higher prices, subdued wage growth and government austerity measures.
On Wednesday, smaller French retailer Casino reported slower growth in France but offset that with strong growth in emerging markets.
Carrefour is suffering more than most because it makes the bulk of its sales in hypermarkets, which are losing out to specialist stores in mature western European markets.
It has also admitted mistakes, such as raising prices in France before rivals such as E Leclerc and Intermarche. In August it announced a new drive to cut prices.
FRENCH HYPERMARKET WOES
Carrefour, the world's second-biggest retailer by sales after U.S. group Wal-Mart, said third-quarter sales edged up 0.3 percent to 22.8 billion euros ($31 billion), in line with forecasts as robust growth in emerging markets barely offset weak sales in France and western Europe.
Sales at French hypermarkets open at least a year dropped 4.6 percent excluding fuel in its fiscal third-quarter, deteriorating from a 1.7 percent decline in the second quarter.
That included a 9.6 percent plunge in underlying sales of discretionary non-food goods, highlighting the extent to which shoppers are cutting back on non-essential purchases.
Carrefour, which makes about 40 percent of its sales in France, tied part of the decline to the initial impact of a new action plan it launched that entailed fewer promotions and more longer-term price cuts.
Elsewhere in Europe, austerity and economic uncertainty weighed on consumer sentiment in Spain and Italy, while Belgium confirmed its rebound.
Emerging markets remained sources of growth, with sales in Latin America rising 10.2 percent at constant exchange rates.
However, JP Morgan Cazenove analysts said the group's performance in countries like China and Brazil was lagging rivals like Tesco and Casino respectively.
Carrefour shares have lost over 40 percent this year, worse than a 16 percent decline for Casino and a 10 percent drop in the STOXX Europe 600 retail index.
RBS's Scarborough said the pain was unlikely to end soon.
"While the share price is down by 40 percent year-to-date, we have so far cut our 2011 earnings per share forecast by 42 percent -- ie there has been no de-rating of the shares."
Recognizing the challenges for its hypermarkets, Carrefour set out an ambitious plan to reinvent the format last year with new "Carrefour Planet" stores that drop the commitment to sell everything under one roof in favor of a smaller number of specialist areas like fresh food and baby foods.
Carrefour said the roll-out of the Carrefour Planet was on track with 50 stores in Europe open at end-September and an unchanged target of 82 stores by year-end.
The success of Carrefour Planet is likely to be key to the survival of Chief Executive Lars Olofsson, who so far has retained the backing of the group's powerful top shareholder Blue Capital -- an alliance between French luxury tycoon Bernard Arnault and U.S. investor Colony Capital.
($1=0.725 Euros)
(Editing by Mark Potter and Mike Nesbit)
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