Retail sales unlike to improve, Metro warns

04 August 2009

DÜSSELDORF: Metro, the German retail giant, has warned that market conditions are unlikely to improve in the short-term, and is therefore seeking to balance its expansion plans with a wide-ranging cost-cutting programme.

The consumer electronics, cash and carry, supermarket and department store group saw its net profits for the quarter ending in June reach €48 million ($69.2m; £40.8m).

Sales fell by 3.8%, to €15.9 billion, in Q2 this year, including a decline of 0.3% in its home market, which contributes 40% of all revenues.

Eckhard Cordes, its ceo, argued that "in view of the massive economic crisis, Metro Group stood its ground well" over the last reporting period.

"In Western Europe we see possible signs of stabilisation. However, talking today about green shoots would not be prudent," he added.

A statement from the company also warned that "clear signs for a fast economic upswing after the severe downfall are so far not discernible", meaning "retail sales will further decline in the coming months."

Earlier this year, Metro initiated a cost-cutting drive, operating under the banner Shape 2012, which will see it reduce its headcount by at least 15,000 people – a figure Cordes predicts could ultimately reach 17,000 – while seeking to boost its profits by €1.5bn.

In order to achieve this latter aim, the world's fourth-biggest retailer will continue with its efforts to expand, so that it can secure an "excellent starting position for the next upturn," Cordes said.

Data sourced from Wall Street Journal; additional content by WARC staff