The outlook on the long-term IDR is stable. Fitch’s recent action reflects Carrefour's expected operating profit decline in fiscal year 2009, with "activity contribution" (a measure of recurring operating profit) in the range of 2.7-2.8bn euros, down approximately 18% from fiscal year 2008's 3.3bn euros.

The company attributed the decline as being mainly due to operating margin compression in the group's core French and Spanish markets, given the depressed economic environment and the company's more aggressive commercial initiatives.

Positive rating factors include the group's size, leading position in its main core European markets, the group's multi -format strategy and its international diversification in emerging markets, where it benefits from market leadership compared to European peers and good operating performance momentum, notably in Brazil.

Carrefour is implementing a major cost savings plan and more aggressive commercial initiatives to drive in-store customer traffic and gain market share.

The company expects its new plan to achieve savings of 4.5 bn euros - notably 3.1 bn euros of cost savings mainly from operations in France, Spain, Italy and Belgium, and an additional 1.4 bn euros from a reduction in inventories by 2012.

"The key challenge for Carrefour going forward is its ability to successfully implement its new cost savings plan in an environment characterized by low inflation, subdued consumer demand and intense competition and promotional activity among retailers," said Johnny Da Silva, European Food Retail Analyst in Fitch's Corporate team.