Media-Saturn founder hits out as Metro dispute escalates

Tue Apr 29, 2014 6:11am EDT

* Media-Saturn founder Kellerhals owns 22 pct blocking minority

* Kellerhals impatient over Media-Saturn CEO replacement

* Metro hoped court ruling would let it sidestep Kellerhals

* Dispute delayed online entry, scuppered China plans

By Emma Thomasson and Matthias Inverardi

BERLIN/DUESSELDORF, April 29 (Reuters) - The founder of Europe's biggest electronics chain Media-Saturn on Tuesday launched an attack on the company's majority owners, retailer Metro, escalating a long-running dispute over the management of the chain.

Media-Saturn's billionaire founder, Erich Kellerhals, still owns a stake of close to 22 percent and has regularly disagreed with Metro over its management of the business, most notably delaying the group's move into the fast-growing online market.

"I am deeply concerned about how Media-Saturn is currently being administered by Metro. I deliberately say 'administered' because at present there is no sign of entrepreneurial leadership," Kellerhals said in a statement on Tuesday.

Metro declined any immediate comment on the statement.

Metro had hoped a court ruling in December that allows it to sidestep Kellerhals' veto over critical business decisions would enable it to push ahead with its strategy for the unit that accounts for about a third of the group's sales.

But Kellerhals still has a say in top appointments and last week made a call on his own website for applications to replace Media-Saturn boss Horst Norberg when he retires next year, saying Metro was moving too slowly with succession planning.

"I don't understand why such important decisions are put on the back burner," he said.

Metro, Europe's fourth-biggest retailer which also runs wholesale outlets, hypermarkets and department stores, has been fighting to stop sales sliding in recent years due to online competition and tough economic conditions in its core markets.

It reports results for its second quarter, which runs from January to March, on May 8.

Media-Saturn, the world's second biggest consumer electronics chain after Best Buy, which competes with Dixons Retail and Darty Plc, saw sales fall 0.7 percent to 6.6 billion euros ($9 billion) in the last quarter of 2013, hurt by falling currencies in eastern Europe.

Kellerhals said Media-Saturn, which has almost 1,000 stores in 16 countries employing 64,000 staff, was being run more and more from the centre, with an increasing focus on financial indicators to the detriment of the operating business.

"It is no good if customers face half-empty shelves so you can impress equity analysts with low inventories and great working capital figures. Numbers are important but customers and employees are more important for long-term success," he said.

Kellerhals pulled out of a Media-Saturn joint venture in China in 2012, saying Metro should have expanded there more quickly and aggressively. Metro later scrapped the venture in China altogether, citing tough market competition.

Kellerhals opened the first Media Markt store in Munich in 1979, entering into a partnership in 1988 with the forerunner of the Metro Group, which brought Media Markt together with its Saturn chain and drove a global expansion. ($1 = 0.7223 Euros) (Editing by Keiron Henderson)