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UPDATE 2-Metro sales hit by sluggish Christmas and forex impact
January 13, 2014 / 6:55 AM / in 4 years

UPDATE 2-Metro sales hit by sluggish Christmas and forex impact

* Q1 sales down 3.3 pct, like-for-like up 1.1 pct

* CEO: Sales in line with outlook despite “soft Christmas”

* Metro cash & carry pulls out of Egypt on political turmoil

* Like-for-like sales fall at Real supermarkets,Media/Saturn

* Shares down 0.8 pct vs 0.5 pct sector rise

By Emma Thomasson and Matthias Inverardi

BERLIN/DUESSELDORF, Jan 13 (Reuters) - German retailer Metro AG has reported a drop in sales in its fiscal first quarter, saying turnover in the key Christmas period had been soft and its headline numbers had been hit by negative currency effects.

Europe’s fourth-biggest retailer, which runs cash and carries, supermarkets, department stores and the region’s top consumer electronics chain, said sales had fallen 3.3 percent to 18.7 billion euros ($25.6 billion) in the three months through December.

Stripping out the impact of weaker currencies in eastern Europe and Asia, as well as the closure of supermarkets in eastern Europe and electronics stores in China, sales rose 1.1 percent, slowing from 1.8 percent in the previous quarter.

The main contributor to the like-for-like increase came from an improvement at the cash and carry business, which accounts for almost half group turnover, while sales fell at the Media-Saturn electronics stores and Real supermarkets due to tough competition from online and discounter rivals.

“Our new financial year got off to a solid start in spite of the still challenging economic backdrop; soft Christmas sales prevented a better development,” Chief Executive Olaf Koch said in a statement.

Koch said the sales development was still in line with the company’s guidance for “slight absolute sales growth” in its 2013/14 financial year. Metro reports full figures for the October to December period on Feb. 11.

“Metro’s first-quarter 13/14 numbers were broadly in line with our expectations and those of the market consensus,” said Citi analyst Pradeep Pratti.

“No update on guidance was provided for the full year which, if anything, should be interpreted as a slight positive.”

Metro shares, which trade in line with Europe’s biggest retailer Carrefour on 17 times forward earnings, were down 0.8 percent at 0813 GMT, underperforming a 0.5 percent rise in the European retail index.


The sprawling group, which runs over 2,200 outlets in 32 countries but gets just over two thirds of sales from Germany and other western European countries, is trying to revive its fortunes by divesting non-core businesses, cutting prices at its cash and carries and revamping product ranges.

The cash and carry business reported like-for-like sales grew 0.9 percent to 8.5 billion euros as trading in Germany and the rest of western Europe improved against the 2012/13 year.

However, Metro said it had closed its two MAKRO cash and carry stores in Egypt, saying it saw no expansion opportunities in the country which has been hit by political turmoil.

Metro shares had jumped on Friday after a media report said family-owned conglomerate Haniel was considering pushing for a breakup of the group, in which it owns a little over 30 percent. But they reversed most of the gains after a spokesman for Haniel dismissed the report.

Metro has long stated its wish to sell off its Kaufhof department stores and Real hypermarkets divisions to focus on its cash and carry and consumer electronics stores, which it feels have better expansion prospects abroad.

Metro said German like-for-like sales at Real fell 2 percent due to tough competition from discounters and a high prior-year base, while they rose 0.8 percent at Kaufhof, but were still held back by mild winter weather dampening sales of clothes.

Metro’s Media-Saturn electronics chain, which has suffered from a late entry into e-commerce, saw like-for-like sales fall 1.2 percent, though online sales grew by more than 40 percent.

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