Carrefour lowered its full-year profit forecast as an “unsatisfactory” performance in the French retailer’s core domestic market weighed on first-half results, while pledging a new commercial strategy to boost an revamp in its European stores.

The world’s second largest retailer by sales expects a 15 per cent drop in current operating income for 2011, a reversal from a previous estimate that this would increase.

While sales growth had been fuelled by emerging markets, “overall results were unsatisfactory, weighed down by a poor performance in France and non-recurring items”, Lars Olofsson, chairman and chief executive, said in a statement.

He added there would be “radical and decisive actions” in a plan to boost performance designed to “put Carrefour back on a sound footing to rebuild momentum”.

Carrefour posted first half net income of €153m, down from €302m for the same period in 2010. The drop was linked to one-off charges of €884m, primarily due to impairment charges of €516m and operating tax expenses.

Sales were up 2.3 per cent to €39.61bn.

The group is already mid way through a refurbishment of many of its European hypermarkets into ‘Carrefour Planets’, but said on Wednesday there would be an increased focus on improving competitiveness in its core domestic market, which accounts for around 40 per cent of group sales.

Capital spending will be restricted elsewhere in Europe, which includes operations in Italy, Spain and Greece.

The group warned that it expected trends in Europe, where conditions have been most challenging, “to continue broadly unchanged.” It also said that it would have 82 Planets by the end of the year, short of the original target of 98.

However, the group said it was on track to reduce operating costs by €480m this year, recording €236m of savings for the period.

Carrefour posted operating profit, excluding non-recurring items, of €772m, down 22 per cent from 2010.

The retailer had prepared investors for a disappointing performance as early as June, issuing guidance that first-half operating income in France had fallen by 35 per cent.

Sales in France were up 1.6 per cent from the same period last year to €17.07bn. Operations in Latin America, the group’s most important non-European market, registered the strongest growth with a 12.9 per cent increase in sales compared to 2010 to €7.3bn.

Shares in Carrefour fell 4.5 per cent to €18.13 in early Paris trading.

The Financial Times