Metro AG (MEO), Germany’s biggest retailer, said it’s “confident” about Christmas business after increased electronics sales in its home market reporting helped nine-month revenue meet analysts’ estimates.
Sales fell 2.2 percent from a year earlier to 46.3 billion euros ($62.7 billion) in a nine-month transitional financial year ended Sept. 30, Dusseldorf-based Metro said today in a statement. The average estimate of 12 analysts was 46.4 billion euros.
“We are well prepared and confident for the upcoming Christmas trading period” before the Dec. 25 holiday, Chief Executive Officer Olaf Koch said in the statement. “We have become more relevant to our customers at every division, and grew our market share sustainably in many relevant markets.”
German consumer confidence is at the highest level since 2007 as unemployment is near a two-decade low. The Frankfurt-based Bundesbank predicts that gross domestic product growth will accelerate in 2014 to 1.5 percent from 0.3 percent in 2013. The final three months of the calendar year account for more than 60 percent of Metro’s annual profit, John Kershaw, a London-based analyst at Exane BNP Paribas, said in an e-mail.
Koch has focused investments on the Cash & Carry wholesale business and Media-Saturn household-electronics chain, which together account for almost 80 percent of Metro’s revenue, while divesting other businesses. The retailer stopped selling underperforming non-food articles at Cash & Carry and worked on improving the lineup and prices at Media-Saturn while increasing online sales at the unit.
Metro’s disposals since mid-2012 have included Real hypermarkets in eastern Europe, which were sold to Groupe Auchan SA, and the Makro wholesale business in the U.K., which was acquired by Booker Group Plc. Koch reiterated in August that Metro’s strategy still includes selling the Kaufhof department-store chain.
Earnings before interest, taxes and special items in the shortened financial year probably met the company’s forecast of “slightly” exceeding the nine-month 2012 level of 706 million euros, Metro said. The retailer is scheduled report fiscal-2013 earnings in December.
“That guidance has been reiterated is no surprise, given management’s continued more positive tone,” Exane analyst Kershaw said.
Following the truncated fiscal year, Metro now operates on a 12-month October-to-September reporting period. The retailer’s shareholders agreed to the shift at the annual meeting in May 2012.
Revenue at Cash & Carry declined 2 percent to 22.6 billion euros because of negative currency effects in Russia, Turkey, India and Japan. Sales at Media-Saturn gained 0.6 percent to 14.4 billion euros as like-for-like sales grew in Germany, making up for a “challenging” market in southern Europe.
Sales adjusted for portfolio changes and currency effects gained 0.9 percent in the short financial year, Metro said.
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