July 31 (Bloomberg) -- Metro AG, Germany's largest retailer, reported a second-quarter loss on costs to shut Real superstores and a writedown for its Adler fashion chain.

The loss of 246 million euros ($383 million), or 75 cents a share, compares with a year-earlier profit of 110 million euros, or 34 cents, the Dusseldorf, Germany-based company said today. Excluding one-time costs, interest and taxes, profit rose 6.6 percent to 329 million euros, above the 323 million-euro median estimate of five analysts surveyed by Bloomberg.

Metro maintained forecasts for operating profit growth and sales this year as rising electronics sales at the Media Markt chain and foreign expansion offset the stagnant German food market. The company is closing Real outlets that had missed goals to revive profit after the chain had a second operating loss in three years in 2007, hurt as pressure on incomes spurred Germans to choose discount grocers.

``We see Metro as on track to reach its own targets,'' Volker Bosse, an analyst at UniCredit in Munich, wrote in a research report today as he maintained his ``hold'' rating on the stock. ``Nevertheless, the retail environment for retailers remains challenging, as we see a deteriorating consumer climate in nearly all western European countries.''

Quicker Disposal

The retailer's writedown of Adler was aimed at speeding a sale of the unit. Metro said last week second-quarter figures would include about 600 million euros of one-time expenses. The median analyst estimate was for a 431 million-euro loss, 75 percent more than the reported figure.

Metro fell 1.15 euros, or 3 percent, to 36.25 euros. The stock has slid 37 percent this year.

The retailer said in March about 40 of Real's German stores were ``substantially underperforming'' and had lost as much as 50 million euros last year. It plans to sell 27 outlets in the chain, which postponed its expansion into Ukraine to next year, by the beginning of 2010.

``We don't expect any further expenses from the disposal of the stores,'' Chief Executive Officer Eckhard Cordes told reporters today at a press conference. Metro may sell or close as many as 10 more domestic Real outlets, he added. The company expects savings of as much as 40 million euros a year from 2010 from the disposals.

Deteriorating Profit

Adler, which has 125 shops in Germany, Austria and Luxembourg, has been up for sale since at least 2004. The unit generated sales of 518 million euros last year, less than 1 percent of Metro's total revenue. Ebit was 17 million euros and will be worse than that for this year, Chief Financial Officer Thomas Unger said today.

Adler will be classified as a ``discontinued operation'' starting with the current quarter and will be sold within the next 18 months, he added. The unit is underperforming even as the German clothes retailing market shrinks by as much as 5 percent this year, according to the CFO.

Cordes ``is taking appropriate measures that are likely to result in leaner and more efficient operations,'' Juergen Elfers, an analyst at Commerzbank in Frankfurt, said in a research report before today's figures. He has an ``add'' rating on the stock.

Russia, Morocco

Operating profit at the Cash & Carry wholesale unit gained 5.5 percent to 297 million euros on a 5.3 percent increase in sales to 8.19 billion euros. The division is Metro's biggest by sales, with stores in about 30 nations from Russia to Morocco.

Second-quarter profit rose 14.6 percent to 62 million euros at Saturn and Media Markt consumer-electronics shops as sales gained 13.8 percent to 4.08 billion euros. Metro plans to expand the chains further by opening more Turkish and Russian stores this year and the first outlet in Luxembourg.

The Kaufhof department-store unit, which Cordes has said may be sold, reported an unchanged operating loss of 29 million euros while sales fell 3.1 percent to 764 million euros.

Metro gets about three-fifths of revenue from outside Germany, up from less than half five years ago, after adding foreign stores to capitalize on stronger economic growth. The country's HDE federation of retailers has forecast a drop in industry sales this year as inflation rises and a probable contraction in 2009 as the economy slows.

Second-quarter sales rose 2.3 percent in Germany and advanced 10.1 percent in other countries. Sales rose 0.7 percent to 2.11 billion euros at domestic Real outlets and jumped 31.2 percent to 687 million euros in Russia and the other nations where the chain operates. Real's operating profit loss widened to 245 million euros from 45 million euros in the quarter.

The unit had 434 stores at the end of 2007, of which four- fifths were in Germany. Cordes has set a goal of reviving Real's performance within two years and named former Carrefour SA manager Joel Saveuse to head its management board last year.

The retailer has forecast gains this year of as much as 8 percent in operating profit excluding one-time costs and more than 6 percent in sales.

To contact the reporter on this story: Holger Elfes in Dusseldorf at helfes@bloomberg.net

Last Updated: July 31, 2008 13:42 EDT