Metro's domestic performance slips

By Anita Awbi

- Last updated on GMT

Related tags: Cent, Germany, Retailing

Metro Group's domestic first-quarter sales have fallen 3.8 per cent
in the difficult retail sector, while increased international
earnings continue to prop up overall performance.

Yet again Metro's results belie a difficult trading environment in Germany, as the company saw a sales tumble in its flagship Real banner by 8.7 per cent.

As a result Real widened its earnings before interest and tax (EBIT) loss to €40m from a loss of €5m the year before.

This impacted overall earnings for the group, as the negative sales trend in Germany and a costly Real hypermarket expansion programme in Russia and Romania added pressure on profit margins.

Sales for all German operations, including the Media Markt and Saturn electronic centres, and Makro/Metro wholesale stores, stood at €6bn compared to €6.26bn last year.

Chief executive office Hans-Joachim Korber admitted the company is continuing to "feel the general purchasing restraint"​ that affected year-end results in January, and is endemic of the slow German retail market.

But he insisted the late timing of Easter also impacted results, and expects performance in the second half of 2006 to be stimulated by incoming VAT tax hikes and the looming World Cup event this summer.

Overall, Metro achieved a 4.8 per cent sales growth to €13.3bn, with sales in Western Europe growing eight per cent, Eastern Europe by 20.2 per cent and Africa and Asia by 28.7 per cent.

Combined, the international division raised its contribution to overall sales figures to 54.8 per cent, up more than four per cent on last year.

Against this backdrop the group will continue to push further into the growth markets of Eastern Europe and Asia, and expects an overall sales rise of four to six per cent for the year.

The company now operates in 30 countries, with wholesale stores, hypermarkets, supermarkets and department stores.

Turnover for 2005 was €55.7bn.

Related topics: Market Trends

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