German recession does little to boost Spar interims
of the year, hit by the weak domestic economy and delays to its
much-needed restructuring programme. But the chain remains
confident of an upturn in the second half.
Sluggish consumer demand in the German market coupled with its own ongoing restructuring programme pushed the Spar retail group into the red in the first half, but the French-owned group said it expected to see a marked improvement in the latter part of the 2003.
Hamburg-based Spar, which is part of the ITM group which operates the Intermarché fascia in France, reported operating losses of €64.5 million for the period from January to June. A year earlier, losses were €60.9 million.
Sales during the first half were some 5.9 per cent lower at €3.02 billon, with the wholesale division and the supermarket arm underperforming significantly as a result of the very weak German economy.
ITM has been busy restructuring the Spar business over the last few years, with the German group's supermarket operations in particular struggling to perform in line with expectations.
That restructuring has been delayed even further, according to ITM, as a result of a failure to reach an agreement with the banks over future financing for the group. The chain was saved from bankruptcy in May after an agreement was reached with its creditor banks, but they clearly remain unconvinced about the company's future prospects.
But with the German economy seemingly on the verge of coming out of recession, and with the group's restructuring likely to finally take effect during the next six months, the company said it was hopeful that full year figures would be considerably better than those for 2002.
Last year the company posted net losses of €379.4 million, impacted by restructuring costs of €272 million. Operating losses were €153.8 million, while sales were €7.3 billion.
The restructuring plan involves the closure of around 100 stores this year and a further 170 being sold off in 2004. The company is continuing to invest in its Netto discount chain - whose good performance was one of the few positive highlights of 2002 - and will continue to supply a large number of independent retailers.
