France's Carrefour free to focus on home market after retreat from China

Asia .
France's Carrefour free to focus on home market after retreat from China

(Reuters) - Shares in France’s Carrefour rose on Monday after it became the latest Western retailer to retreat from the Chinese market as fierce competition from domestic rivals and a growing online market puts pressure on foreign firms.The pullback allows Europe’s largest retailer to focus its revival efforts on its home market where it is under intense competitive pressure from traditional rivals and from Amazon.com Inc.

Investors welcomed a long-awaited all-cash deal struck at what analysts said was a good enough price in view of Carrefour’s falling sales and operating losses in China. Carrefour, which has been in China since 1995, agreed to sell 80% of its Chinese operations to electronics retailer Suning.com for 620 million euros ($705 million).

Carrefour, led by Chief Executive Alexandre Bompard since 2017, has spent years trying to fix its business in China where its 2018 sales fell 5.9% and its operating loss was 32 million euros.

The agreement with Suning values Carrefour’s China operation, including debt, at 1.4 billion euros ($1.6 billion), with options to sell the remaining 20% stake.
Carrefour will keep two out of seven seats on the board of Carrefour China. The Carrefour brand will be kept for at least 4.5 years after completion of the deal.
By 1205 GMT, Carrefour shares were up 1.1% at 17.19 euros, after opening up 2.5 percent.

 

 

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