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PARIS-Carrefour, the second largest retailer behind Wal-Mart, reported net profit for the first half of the year slipped 6.9% to E$687 million (US$858 million) from E$737 million (US$921 million) a year ago.

In its 2005 update report released Thursday, the company said it is on track to add approximately 15 million sf of new space in 2005 through new stores, expansions and acquisitions. Year-to-date, the company has acquired nearly 4.6 million sf of new space in Poland, Italy, Turkey, Cyprus, Brazil and France.

The company said its main focus is of hypermarket repositioning related to non-food items. The company is working to upgrade its product assortment including the development of a private label while improving the quality of its stores. Currently, nonfood now accounts for 10% of sales versus 3% five years ago.

Moving forward, execs will be studying ways to adapt Carrefour large-format units in new market conditions. “We believe that hypermarkets continue to offer good opportunities for growth, however, hypermarkets can grow only if they are able to differentiate versus other formats,” states the report.

In the first half of the year, the company was up against steep competition in its native land of France. As a result, the company plans to beef up profits in alternate regions with the belief that “a greater contribution from new stores in Europe, Asia and Latin America means that France will become progressively less important as a profit driver for the group.” Yet the company remains committed to its home, saying it is expanding and upgrading its Champion-store portfolio, and is on track to expand 100 stores and remodel another 100 by year-end.

In Spain, the company is adopting “radical solutions” to eliminate losses in its Spanish hypermarket business. Between 2001 and 2004, the company opened 69 stores and closed 69 stores, sparking execs to consider re-branding and reformatting the Spanish units. Thus far, five hypermarkets have been transferred to the Maxi Dia concept and 11 “mini-hypermarkets” have changed over to the Carrefour banner. The remaining 165 stores have been renovated into a “soft-discount” format.

Additionally, the company is planning six new hypermarkets in Italy this year, as well as the conversion of the large-store formats to a mini-hypermarket concept and the re-branding of medium-sized stores as superstores. Carrefour is also testing a soft-discount format in some of the smaller Italian units.

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