Carrefour Faces Rowdy Protesters

PARIS - Carrefour SA's board approved a plan for Chief Executive Lars Olofsson to become chairman as well, putting him alone on the front line of the struggling retailer's transformation.

At a raucous shareholder meeting, Chairman Amaury de Seze announced he would step down. “The time has come to reunite the two functions,“ Mr. de Seze said. He will remain on Carrefour's board. The changes were approved at a board meeting Tuesday.

Mr. Olofsson will have a gargantuan task on his hands as chairman and CEO. He is a year into a multipronged, three-year turnaround on which his job depends.

One step of the transformation was accomplished at the shareholder meeting, when investors approved the spinoff of the Dia discount unit. Dia will be listed on the Madrid stock exchange on July 5, and each Carrefour investor will receive a Dia share for each Carrefour share.

Yet Mr. Olofsson also is juggling several other projects as part of the overhaul. He is spending 1.5 billion euros ($2.15 billion) to renovate the hypermarket chain in Europe and rolling out thousands of Carrefour-branded groceries. He has faced setbacks in what he calls an “ambitious“ plan, including a management shake-up at the core French operations.

The overhaul is necessary to reignite consumer traffic in Carrefour's French stores, which accounted for 39% of its 90 billion euros in sales last year. Carrefour faces stiff price competition from more nimble rivals.

Mr. de Seze said the board and management “will take our responsibility“ if the turnaround hasn't produced good results in the next two years. People are eager for faster results.

The shareholder meeting laid bare the tension at the world's second-largest retailer, after Wal-Mart Stores Inc. The meeting, in the basement of the Louvre museum, was interrupted by protests and jeering from investors and disgruntled employees. The police were called when security guards had trouble containing more than a hundred protesters waving flags and blaring horns. A women's activist group stormed the stage to mock the “virility“ of the company's male leadership.

“You are impatient,“ Mr. de Seze said to the audience. “You think things aren't going fast enough, and the results are not up to expectations. I understand you.“

Shareholders at the meeting criticized the influence of Carrefour's biggest investor, a joint venture between luxury-goods tycoon Bernard Arnault and U.S. private-equity fund Colony Capital LLC, for using all means to prop up the sagging share price. In particular, shareholders raised questions about the risk of selling off operations in booming emerging markets.

Mr. Olofsson sought to reassure investors that emerging markets are central to Carrefour's growth prospects. He said Carrefour's ambition is to be a leader in countries like China, Indonesia and Brazil, where it has hundreds of hypermarkets.

By the same token, Carrefour intends to keep majority control of its operations in Brazil. The French retailer has been in discussions with the chairman of Brazilian retailer Cia. Brasileira de Distribuicao to possibly merge their operations in Latin America's largest economy, people close to the matter said.

Carrefour's negotiations with CBD Chairman Abilio Diniz have ruffled feathers. Mr. Diniz and Carrefour rival Groupe Casino SA jointly control CBD. Casino has filed for International Chamber of Commerce arbitration against Mr. Diniz to protect the joint venture. Police recently searched Carrefour's offices for evidence of contact with Mr. Diniz, according to a person close to the situation.