Europe’s top retailer said first-half operating income in France would fall 35 percent, raising fears about its full-year outlook and dragging down its shares 6 percent on Friday to a two-year low.

The stock later recovered and by 1346 GMT was down 1.9 percent at 27.24 euros.

The retailer disclosed the warning in stages, first in a news release about an executive shake-up then to analysts before coming clean on Friday.

The profit warning — the third under Chief Executive Lars Olofsson since autumn 2010 — is sure to add to investor rancour over a sub-par stock performance and anxiety that management is not acting in the interest of all its shareholders.

“I expect an agitated meeting. People will vent their frustration over a rather murky strategy,” Pierre-Henri Leroy, head of shareholder advisory group Proxinvest, said.

Many investors argue Carrefour is too influenced by its key shareholder Blue Capital, which combines luxury billionaire Bernard Arnault and US property specialist Colony Capital.

Olofsson will be under pressure to reassure investors he can stilll deliver on Carrefour’s turnaround plan following a series of strategic U-turns, analysts said.

They said a warning about the French operations had been on the cards since Olofsson fired France chief James McCann in May over underperformance in France, where Carrefour faces fierce price competition from rivals like E Leclerc and Auchan.

But they were surprised by its magnitude.

Patrice Lambert de Diesbach, head of Carrefour Investor Relations, said Carrefour was maintaining its full-year target of improving operating income overall.

But analysts said this would be challenging.

“We now expect EBIT to fall 4-5 percent. As such our numbers now assume Carrefour will drop its guidance,” Citi analysts said in a note.

Carrefour, weakened by two profit warnings last year, has also faced a series of defections by top managers due to dissent over a shelved plan to list part of its property assets.

“We want Olofsson to provide explanations on the strategy. We want to know where Carrefour is going and these old fogies on the board to wake up,” said Didier Cornardeau, the head of French small shareholders right association Appac.

Olofsson may also face questions about a possible merger of Carrefour’s Brazil unit and local rival Pao de Acucar and needs to secure shareholder approval for plans to spin off and list Dia, the world’s third largest discount chain, in what would be the latest attempt to highlight the value of Carrefour’s assets.

For the Dia spin-off to go through shareholders must back one resolution during the extraordinary part of the meeting requiring a two-thirds majority and another during the ordinary part which requires a simple majority.

“As such, it is very likely that the Dia spin-off will be accepted with Blue Capital already having 20 percent of the voting rights,” HSBC analysts said in a note.

CM-CIC analyst Christian Devismes cautioned that the risk of a vote sanctioning the company cannot be ruled out.”

Some investors are skeptical about a spin-off of Dia, which analysts value at between 2.6 billion and 3.2 billion euros, excluding 800 million euros in debt.

US activist Knight Vinke, which had led a successful rebellion against the property spin-off, said in May it will back the Dia move.

The support of influential proxy advisory group ISS may also sway shareholders in favor of the spin-off which is also backed by local shareholders rights group Proxinvest and Deminor.

“Given that Dia should trade at higher multiples than Carrefour, it would compensate for the loss in value in the separation,” the ISS report obtained by Reuters said.

Appac remains hostile to the plan, as do Carrefour’s unions, which are planning protests outside the AGM to be held at a shopping center next to the Louvre museum in the heart of Paris.

The unions view the Dia spin-off as a step toward a future break-up of Carrefour designed to allow Blue Capital to recoup its losses. 

Carrefour’s critics argue the group is too influenced by Blue Capital and must resist its pressure to regain crebility with minority shareholders.

“Companies driven by a purely short-term financial view cannot treat well their employees nor their minority shareholders,” the head of Deminor Fabrice Remon said.

Some believe Carrefour should have more independent members on its its board.

Proxinvest Pierre-Henri Leroy is particularly critical of Carrefour Chairman Amaury de Seze and said his group will oppose a resolution to renew de Seze’s three-year mandate as board chairman at the AGM. Blue Capital, which owns about 13.5 percent of the equity and 20 percent of the voting rights at Carrefour, was a driving force behind Carrefour’s plans to spin off 25 percent of its European property assets and all Dia.

The investor, which has three seats out of 11 on Carrefour’s board, is now down 40 percent on their 2007 investments.