PARIS: Carrefour, Europe's biggest retailer, is pulling out of Greece in a sign companies are struggling to do business in a country where demand has plunged due to a debt crisis and whose future in the euro is in doubt.
The French group said yesterday it was selling its stake in a Greek joint venture to local partner Marinopoulos, which will become its franchisee.
The move comes as companies battle 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.
Italy's biggest utility Enel said yesterday it was selling its Irish business, while French bank Credit Agricole moved on Thursday to take direct control of its Albanian, Bulgarian and Romanian units from its Greek bank Emporiki in order to minimise the impact from any Greek exit from the euro.
A spokesman for world number four retailer Metro, however, said yesterday the German group had no plans to pull out of Greece, where it operates nine wholesale stores. Britain's Marks & Spencer also said last month it would stay in Greece, though it took a £44.9 million ($70m) write-off on its business there..
Carrefour, which saw first-quarter sales plunge 16 per cent in Greece, said it was taking a 220m euro ($277m) mostly non-cash charge as a result of the deal. It did not disclose any other financial details.
Carrefour, the world's second-biggest retailer behind Wal-Mart, made 2.2 billion euros of sales in Greece last year, but Espirito Santo analysts estimate the business lost around 40m euros.
CM-CIC Securities analysts put the loss at 90m euros.
"We are comfortable that it was a rational business decision to cut losses at this juncture, since any hope of recovery from this business unit was invisible," said Citi analyst Alastair Johnston.
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.