Carrefour feels the pinch with new profit warning

Carrefour, Europe's No.1 retailer, issued a fresh profit warning on Thursday, citing an increasingly challenging economic climate that has seen shoppers cut spending at its core French hypermarkets.

The French group, already struggling with a string of profit warnings and strategy U-turns, said it now expected 2011 operating profit to drop by between 15 percent and 20 percent against a previous forecast for a 15 percent decline.

The world's second-biggest retailer by sales after U.S. group Wal-Mart made the prediction after it eked out a 0.3 percent gain in third-quarter sales to 22.8 billion ($31 billion) as robust growth in emerging markets barely offset weak sales in France and western Europe.

Quarterly sales were broadly in line with a forecast of 22.74 billion in a Reuters poll of 12 analysts.

In France, which accounts for about 40 percent of group sales, Carrefour reported a 4.6 percent fall in hypermarket sales excluding fuel. The poll forecast was for a 4 percent drop.

The decline came as cash-strapped shoppers cut back on the purchase of discretionary non-food goods and was worse than the 1.7 percent decline in the second quarter.

Elsewhere in Europe, austerity and economic uncertainty weighed on consumer sentiment in Spain and Italy, while Belgium confirmed its rebound.