Jan 13, 2015
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Metro reports strong Christmas sales at core units

Jan 13, 2015

BERLIN, Germany - Metro AG, Europe's fourth-biggest retailer, saw a recovery gain pace at three of its four businesses in the important Christmas quarter, with growth in consumer electronics the strongest since 2006, boosting its shares.

The German company, which runs 2,200 stores in 30 countries, has been slimming down its portfolio and cutting costs to focus on its wholesale and consumer electronics businesses, sprucing up stores and improving its online offering.

Metro said on Tuesday sales in October to December, the first quarter of its 2014/15 financial year when it usually makes the bulk of profits, fell 2.2 percent to 18.3 billion euros ($21.7 billion), beating analysts' average forecast for 18.2 billion.

Stripping out the impact of the disposal of hypermarkets in eastern Europe, like-for-like group sales rose 2.1 percent, accelerating from a 0.7 percent rise the previous quarter.

Chief Executive Olaf Koch said business over Christmas had created a "solid basis" for achieving his outlook for full-year sales, which Metro expects to rise "slightly" despite "the persistently challenging economic environment".

Shares in Metro, which had fallen 29 percent in the last year due to its exposure to the falling Russian rouble, were up 3.3 percent at 0805 GMT, compared with a 0.3 percent firmer European retail index.

"Metro feels like it is finally transforming to be a modern retailer," said Bernstein analyst Bruno Monteyne, who rates the stock "outperform".

Media-Saturn, Europe's biggest consumer electronics chain which had been losing sales to e-commerce players such as Amazon , reported a strong quarter, with same-store sales up 3.8 percent.

Metro said all regions contributed to that rise, with Spain and eastern Europe particularly strong.

A power struggle between Metro and the founder of Media-Saturn delayed the company's move online until 2010, but e-commerce sales are now growing fast, up more than 25 percent in the quarter.

The cash-and-carry business, which accounts for almost half of sales, saw like-for-like sales climb 1.4 percent, helped by strong growth in Asia and Russia, although that was wiped out when converted into euros due to the slumping rouble.

Metro was forced last year to halt a planned stock market listing of a stake in its Russian cash-and-carry operation due to market turmoil over the Ukraine crisis.

Metro's Real hypermarkets, which face competition from discounters such as Aldi and Lidl, saw like-for-like sales rise 0.9 percent, helped by the revamp of 50 stores.

The group's Kaufhof department stores saw like-for-like sales fall 1.4 percent, which Metro blamed on an unseasonably mild autumn, which hit sales of winter clothing.

€1 = $1.18/£0.78

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