* Media-Saturn embroiled in power struggle with founder
* Metro says other units to compensate for Media-Saturn
* Confirms 2013/14 targets with forex proviso
* Q2 sales down 7.6 pct, at low end of analyst forecasts
* Sales stronger in April, particularly in food
* Shares up 3.9 pct
(Adds detail, background, analyst comment, shares)
By Emma Thomasson and Matthias Inverardi
BERLIN/DUESSELDORF, May 8 German retailer Metro
AG reported a strong rise in April sales in its
cash-and-carry business on Thursday, underlying its confidence
in its profit target despite a poor performance from its
consumer electronics business.
Europe's No. 4 retailer, a sprawling group which also
includes hypermarkets and department stores, has been trimming
its portfolio and cutting costs to respond to sluggish demand in
its core markets of Germany and western Europe, while expanding
in emerging markets.
Metro said its sales for the fiscal second quarter, which
runs from January to March, fell 7.6 percent to 14.326 billion
euros, while it swung to a core loss before special items of 40
million euros, down from a 14 million euro profit. The loss was
smaller than an average analyst forecast.
"Profitability held up better than expected, with underlying
net profit margin 6 basis points ahead of consensus," said
Bernstein analyst Bruno Monteyn.
Metro shares, which trade at 13.4 times forward earnings - a
discount to Europe's biggest retailer Carrefour on
15.9 times - were up 3.9 percent at 0828 GMT.
The quarterly results were hurt by the fact Easter fell this
year in April rather than March and Metro said like-for-like
sales were up 4.7 percent in April, driven by a 4.9 percent rise
for cash-and-carry, which accounts for almost half of sales.
However, its Media-Saturn division, Europe's largest
consumer electronics chain which accounts for about a third of
Metro's turnover, had a poor quarter, with sales sliding 5.8
percent in its home market Germany.
Media-Saturn's CEO quit on Tuesday due to an escalating
dispute between Metro, its majority shareholder, and the firm's
founder Eric Kellerhals, which has hampered its efforts to fend
off tough competition from internet-based retailers.
Metro said other units should compensate for Media-Saturn,
meaning the Metro group should still meet its 2013/14 targets,
including EBIT before special items of about 1.75 billion euros,
although Metro cautioned that negative exchange rates could
still bring that figure down.
Metro said it now expected Media-Saturn's 2013/14 earnings
before interest and tax (EBIT) before special items to
approximately match the prior year's level, compared with a
previous forecast of "sharply rising" earnings.
"Although we would have hoped to see more positive news from
the Media-Saturn sales, we will look to the World Cup as the
next major catalyst, with Metro well positioned to benefit from
any fillip," said Bernstein's Monteyne.
Metro shares have fallen 20 percent this year, largely due
to the company's decision in March to delay a stock market
listing of a stake in its Russian cash-and-carry wholesale
operation due to market turmoil over the Ukraine crisis.
POWER STRUGGLE ESCALATES
Media-Saturn, the world's second-biggest consumer
electronics chain after Best Buy with more than 950
stores in 17 countries, has been embroiled for years in a power
struggle between Metro and the Kellerhals family, which still
owns a stake of close to 22 percent.
The dispute flared in recent weeks as Eric Kellerhals sought
candidates to replace Media-Saturn's Chief Executive Horst
Norberg, prompting the latter to quit on Tuesday.
Metro immediately installed its management board member
Pieter Haas to lead Media-Saturn on an acting basis, but
Kellerhals said on Wednesday he had another candidate in mind,
suggesting the fight is set to continue.
The long-running battle has delayed Media-Saturn's entry
into e-commerce. Only days before he resigned, Norberg announced
a new strategy to accelerate the online push.
Metro Chief Executive Olaf Koch lauded Haas as an expert in
consumer electronics and innovation on Thursday and told a
conference call for journalists that Media-Saturn now needed to
be able to pursue its new strategy "without disruptions".
Metro said online sales at Media-Saturn - which competes
with Dixons Retail and Darty Plc as well as
other e-commerce players - rose by over 35 percent in the first
half of 2013/14 to account for almost 7 percent of total sales.
($1 = 0.7183 Euros)
(Reporting by Emma Thomasson; editing by Thomas Atkins and Tom