Metro Group, the Germany-based retail giant, said today (13 January) that annual earnings will miss an earlier forecast amid slowing sales in the fourth quarter of 2008.
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The company said it expects EBIT to grow “in line” with the sales growth it saw in 2008, when revenues rose 5.9% to EUR68bn (US$90.1bn).
In October, at the time of the publication of Metro’s results for the first nine months of 2008, the retailer forecast a 6-8% rise in EBIT, before special items.
“2008 was a challenging year for the retailing industry,” Metro CEO Eckhard Cordes said. “In the course of [the] fourth quarter [of] 2008, the economic environment drastically deteriorated further. Also the momentum of Metro Group’s business development, especially outside of Germany, slowed.”
Metro saw sales growth slow “significantly” during the fourth quarter of 2008. The economic downturn hit non-food sales, while consumers trading down to less expensive products hit food sales.
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By GlobalDataFourth-quarter sales in Germany rose 2.1%. Metro’s overseas markets, which account for almost 61% of annual turnover, saw sales rise 3.6% during the fourth quarter as sales dipped in western Europe. In total, Metro posted a 3% rise in fourth-quarter sales to EUR20.1bn.
Cordes sounded a warning for the retail sector’s prospects for 2009 but said Metro’s move to trim its capital spending budget to EUR1.6bn would free up some cash in the year ahead.
“”2009 will be a very difficult year. Customers will think twice, where and for what they spend their money”, Cordes said. He added that the cuts to Metro’s capital expenditure plans would create “additional entrepreneurial flexibility”.
“I am convinced that in 2009 we will continue to strengthen our competitive position,” he said.
The retailer will post its annual results for 2008 on 24 March.
