Analysts have welcomed the appointment of Metro Group CFO Olaf Koch as CEO but warned that he has challenges to face.

Last week, reports circled that the board were split between Koch and Joël Saveuse, CEO of Metro's Cash & Carry and Real divisions. The German retail giant made a decision on Friday (18 November) to name Koch as replacement for Dr Eckhard Cordes, who is leaving in October.

Analysts have welcomed the appointment, which they say will allow the retailer to get back on track with its strategic direction. Matthew Truman at J.P. Morgan Cazenove said the appointment of Koch was expected and is the appropriate decision "to ensure the job that has begun, is finished".

Sanford Bernstein said by naming Koch as CEO, investors should be reassured that "Metro is back to business as usual" following recent tensions at the top of the company.

RBS analyst Justin Scarborough classed the appointment as a "safe pair of hands" and welcomes an "end to the uncertainty and speculation", but said it expects no significant strategic change from the current direction.

With challenges ahead, Simon Chinn at Conlumino said Koch's key priorities for the group should be international expansion and building e-commerce platforms.

"The former CEO, Dr Cordes, firmly set in place Metro's international expansion efforts and e-commerce platforms and I think these will continue to be the priorities for the group in the years ahead."

However, analysts believe concerns remain. The retailer announced a drop in third-quarter profits earlier this month but warned there are increased risks over whether it is able to hit its annual 10% EBIT growth target due to uncertainty from the European debt crisis and weakening economic growth.

In a conference call about the group's third-quarter, Cordes confirmed that it is in talks with parties about selling its department store business Galeria Kaufhof.

Chinn said Metro is unlikely to dispose of Kauhof quickly as it will look to "get the best out of any deal made" but added that in the current climate, this will prove very difficult.

Truman added that Metro's biggest strategic weakness is its inability to "drive top quality growth" and dispose of non-core assets.

"As a first step, a disposal of Kaufhof could make strategic sense in this regard, in our view," he said. 

He added that Koch will need "firm support" to persuade investors that the board and leading shareholders are unified by strategy.

Alongside the announcement of Koch's appointment, Franz Markus Haniel was named as the new chairman of Metro's supervisory board. A decision about Koch's successor as CFO is expected to be made at the board's meeting on 16 December.