By Greg KellerPARIS -- Carrefour SA, the world's second-largest retailer, said Thursday its sales growth slowed to just 0.7% in the fourth quarter from a year earlier as its hypermarkets continued to underperform at home and across Europe. The company, second only to U.S.-based Wal-Mart Stores Inc. among the world's biggest retailers, said that despite the fourth quarter slowdown it was on track to achieve the earnings targets it lowered in December. Last month, it warned that "deteriorating global consumption trends, particularly in Europe," would cause it to miss its previous forecast for earnings growth in 2008. Carrefour reported sales of ¿25.7 billion ($33.9 billion) in the fourth quarter. In a statement, the company's new Chief Executive Lars Olofsson said the company "can and should further improve its performance." The company, which operates 1,302 hypermarkets around the globe, said it would achieve the targeted ¿1.5 billion in free cash flow for 2008, as well as "slight growth" in its operating profitability. A hypermarket is a superstore that combines a supermarket and a department store. Until last month, Carrefour had been promising to deliver operating profit growth "in line" with its sales, which rose 5.7% to ¿97.6 billion last year. Speaking in a conference call with analysts, Olofsson said fourth quarter sales had suffered as "Christmas was not as festive as usual." He noted that sales of Champagne at the group's hypermarkets and supermarkets in France fell, while sales of cheaper sparkling wines rose during the holiday period.
Olofsson, who took over from ousted CEO Jose Luis Duran at the start of the year, also warned that "the coming quarter will be tough," and said he doesn't expect to see any improvement from the fourth quarter. The retailer's stock has fallen about 12% since its December profit warning when it cited "deteriorating global consumption trends, particularly in Europe." The shares lost nearly half their value last year, slightly worse than the overall Paris blue chip index. To respond to consumers who have been curbing spending as the French economy slows, the company has been cutting prices on select products in its home market, combined with promotional campaigns. In August, Carrefour announced plans to cut costs by ¿100 million, which then-CEO Duran said wouldn't involve job cuts. On Thursday, Olofsson said he was reviewing these plans "with an aim of accelerating and reinforcing them." French consumer confidence hovered near record lows in the last three months of the year, according to the national statistics bureau, as households remained pessimistic about the future financial situation and worries over future employment figures mounted. France accounts for about 40% of Carrefour's sales. It operates a total of 5,517 stores here, including hypermarkets, supermarkets, hard discount stores and convenience shops.