Carrefour: crash at the crossroads Carrefour is a profit-warning junkie - it has issued five in the past 15 months. Like many addicts caught in spiralling decline, the world's second largest retailer by sales has made flimsy promises to sort itself out - when what it really needs is full-scale rehabilitation. On Thursday it announced that like-for-like sales fell by 2.3 per cent in the fourth quarter, versus last year. When it releases its full-year results, Carrefour predicts earnings before interest and tax up to 20 per cent lower than in 2010. Part of Carrefour's problem is that it has been slow to react to the end of France's hypermarket bubble. These sprawling out-of-town centres account for one-quarter of revenues. But the warning lights have been flashing for some time. The 3.5 per cent drop in the number of shoppers last quarter was merely part of a trend. As a result, like-for-like food sales at these stores fell by almost 4 per cent; higher-margin non-food sales were down 7 per cent. This exodus calls for more urgent action than the management's promised "pragmatic review." In contrast, Britain's Tesco, the world's third largest retailer, has been far more agile. It spotted the limitations of hypermarkets and scaled back its UK expansion plans for these stores. And the growth of its international operations is making up for a lack of it at home. It is curious, then, that investors still value Carrefour's shares at 11 times its expected 2012 earnings, almost one-fifth more than Tesco. That sort of optimism appears confusing at best, and delusional at worst. Since Lars Olofsson became chief executive of Carrefour in 2009, the retailer's earnings per share have fallen by two-thirds. Granted, turning around such a large company takes time. But with activist investors agitating for results, Mr Olofsson's time may be running out. Carrefour's investors should follow the lead of its customers and head for the exits.