Carrefour, Europe’s biggest retailer, is selling out of Greece in a sign companies are finding it increasingly difficult to do business in a country where demand has plunged due to a debt crisis and whose future in the euro is at risk.
The French group said on Friday it was selling its stake in a Greek joint venture to local partner Marinopoulos, which will become its franchisee.
The move comes as companies struggle to cope with a slump in demand in Europe’s most indebted countries, which also include Ireland, Portugal, Spain and Italy, and ahead of elections this weekend which could decide whether Greece stays in the euro. Also on Friday, Italy’s biggest utility Enel said it was selling its Irish business.
Last month Britain’s Marks & Spencer took a 44.9 million pound write-off on its Greek business. Carrefour, which saw first-quarter sales plunge 16 per cent in Greece, said it was taking a 220-million-euro ($277 million) mostly non-cash charge as a result of the deal.
The world’s second-biggest retailer behind Wal-Mart Stores made 2.2 billion euros of sales in Greece last year, but Espirito Santo analysts estimate the business lost around 40 million euros.
“It’s not a bad move even if it costs them money,” said analyst Laurence Hoffman from Oddo Securities.
The sale is one of the first decisions by Carrefour’s new boss Georges Plassat, who is due to address shareholders for the first time on Monday amid hopes he will give some clues on his turnaround plan for a group that has been hit hard by its exposure to sluggish European markets.
“It’s quite positive,” said another analyst who declined to be named. “Greece was a market which had been dragging on them. They have their hands full with other projects. It’s better for them to concentrate on saving their French operations.”
Carrefour shares were up 2.8 per cent in early trading in Paris, leading the benchmark CAC40, though they are still down 20 per cent so far this year.
Carrefour said the sale would allow the joint venture, which also operates in Cyprus, Bulgaria, Albania and other Balkan countries, “to meet the challenges of Greece’s prevailing economic environment.”from the gulf today.