Metro Sees Higher Sales as Germany Buoys Christmas Revenueby
Consumer electronics unit posts sixth consecutive sales gain
German performance offsets weakness in Russian business
German retailer Metro AG said sales are set to return to growth this year after fiscal first-quarter revenue met analysts’ estimates on demand in its home country over Christmas.
Revenue declined 1.5 percent to 17.1 billion euros ($18.6 billion) in the three months through December, Metro said in a statement Tuesday. That matched the average of estimates compiled by Bloomberg. Sales rose 2.1 percent in December at stores open at least a year in Germany.
Chief Executive Officer Olaf Koch is investing in sprucing up stores and adding e-commerce sales after selling underperforming businesses, including the Galeria Kaufhof department stores last year. Revenue at Media Markt and Saturn computer and appliance stores open at least a year rose 0.4 percent, gaining for a sixth quarter while the Kaufhof sale shrank Metro’s overall size.
Metro had a “very good Christmas business, particularly in our domestic market,” Koch said in the statement.
Shares of Metro rose 2.5 percent to 27.20 euros at 9:41 a.m. in Frankfurt.
Strength in Germany helped offset weak demand in Russia, where Metro operates Cash & Carry wholesale food stores for restaurateurs, John Kershaw, an analyst at Exane BNP Paribas, said in a note to clients. The Dusseldorf-based company sells everything from washing machines to bulk foodstuffs across Europe.
Metro has been paying down debt, returning cash to shareholders via a higher dividend, and signaling a readiness to make more acquisitions. The shares rose 20 percent in the fourth quarter, compared with an 8 percent rise in Germany’s mid-cap MDAX Index.
Despite falling sales at its Real food stores, Metro reiterated its forecast for the year. The company said Dec. 15 it expects slight increases in sales and adjusted earnings before interest and tax to this year excluding currency shifts. Metro said Jan. 7 first-quarter earnings before interest and taxes will include 400 million euros in cash from the sale of its wholesale business in Vietnam.
The retailer is scheduled to report full first-quarter results on Feb. 11.