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 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 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 on Friday 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 minimize the impact from any Greek exit from the euro.
A spokesman for world number four retailer Metro, however, said on Friday 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 pound ($70 million) write-off on its business there..
Carrefour, which saw first-quarter sales plunge 16 percent in Greece, said it was taking a 220-million-euro ($277 million) mostly non-cash charge as a result of the deal. It did not disclose any other financial details.
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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 40 million euros.
CM-CIC Securities analysts put the loss at 90 million 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.
Espirito Santo analysts said the move reflected "a pragmatic approach to loss-making international operations and a willingness to restructure, which is positive."
Carrefour shares were up 3.25 percent in morning trading in Paris, leading the benchmark CAC40, though they are still down 20 percent so far this year.
Noting that Southern Europe — Spain, Italy, Greece — made 20 percent of Carrefour's sales and 18 percent of operating profit in 2011, CM-CIC Securities analysts said: "The deterioration in the economic situation in these three countries is obviously putting a drag on the group's outlook."
Carrefour said the sale would allow the Greek venture, which also operates in Cyprus, Bulgaria, Albania and other Balkan countries, "to meet the challenges of Greece's prevailing economic environment."
Carrefour Marinopoulos, formed in 1999, will continue to operate as a franchisee of Carrefour in those countries, with the French company providing products in exchange for a fee.
The venture has 41 hypermarkets, 287 supermarkets and 479 convenience stores in Greece and Cyprus.
Marinopoulos also has partnerships with other global brands in Greece, including Marks & Spencer, Gap Inc., Starbucks Corp. and LVMH's Sephora unit.
Carrefour said on Thursday it had acquired Argentina's struggling discount supermarket chain EKI to strengthen its footprint and expand its convenience store network in the country, without giving financial details.
"We know that EKI has been struggling so it should have been a cheap acquisition," Espirito Santo analysts said.
Carrefour is the market leader in Argentina, a country where it made 2011 sales of 3 billion euros, or 3 percent of total group sales, and where it currently operates 261 stores.
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