PARIS (Reuters) - Carrefour (CARR.PA) chief executive George Plassat told shareholders on Monday that he needs three years to turn around Europe’s largest retailer amid the deteriorating economic climate.
Plassat said his priorities were to reduce debt, examine whether to exit certain markets and reduce overhead costs while restoring power to local managers.
“Have no illusions, there will be headwinds ... I cannot commit to short-term promises,” Plassat told the annual shareholders’ meeting. “It will take three years to relaunch the engine. You need three years to achieve anything that is solid.”
Retail veteran Plassat joined the world’s second-largest retailer, behind Wal-Mart (WMT.N), in April with a brief to reverse years of underperformance in European markets.
“The main origin of Carrefour’s difficulties is the pace of its development,” Plassat said on Monday. “For 15 years, the group has been racing after the cash necessary for its development. We need to restore the group’s financial capacity in order to develop it.”
Plassat had a busy week ahead of the AGM, announcing that Carrefour was exiting Greece, where its sales have been falling because of the debt crisis, and buying Argentinian discount supermarket chain EKI.
The news lifted Carrefour stock by nearly 6 percent on Friday.
Plassat’s arrival raised hopes that Carrefour can be revived and that he can fuel a re-rating of a stock that fell 43 percent last year and has slumped another 20 percent this year.
However, analysts point out that the tough economic climate and Carrefour’s strong exposure to austerity-hit southern Europe complicate his task. Investors - including top shareholder Blue Capital, an alliance of France’s richest man, Bernard Arnault, and Colony Capital - must be patient, they said.
Though Plassat joined Carrefour in April, he was not due to become CEO until June 18. The handover was brought forward when Lars Olofsson retired at a board meeting last month, sparing him the discomfort of the shareholder meeting.
During Monday’s meeting, shareholders and staff expressed anger that the man they hold responsible for the Carrefour mess was leaving with a golden handshake, jeering and booing his name and mentions of his retirement package.
Olofsson, whose three-year tenure was marred by a string of profit warnings and strategy U-turns including a failed merger in Brazil, will pocket 1.5 million euros ($1.9 million) in compensation for a non-compete clause in his contract, plus an estimated retirement package of between 350,000 euros and 500,000 euros.
French shareholder advisory group Proxinvest, which described the package as “excessive” and “shocking”, has recommended voting against it at a time of revolts over executive pay across Europe.
Reporting by Dominique Vidalon; Editing by Mark Potter and David Goodman