Metro Group is mulling whether to offload some 40 Real hypermarkets in Germany as it looks to turn around the chain.
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Chairman Eckhard Cordes said today (18 March) that a sale of the 40 “substantially underperforming” hypermarkets “cannot be ruled out”.
Cordes was speaking in Dusseldorf as Metro posted its financial results for 2007. Metro closed 2007 with an 8.8% rise in underlying profits, thanks to rising sales at home and abroad.
The company booked underlying operating profit – excluding earnings from the Extra supermarkets sold in January – of EUR2.1bn (US$3.3bn).
Metro reported annual revenue of EUR65.9bn, a rise of 7.1% on an organic basis. Including the acquisitions of Wal-Mart Germany and Géant in Poland, Metro saw turnover climb 10%.
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By GlobalDataThe Real business generated EBIT losses of EUR40-50m last year and Cordes has appointed Joel Saveuse the management board of Metro to “significantly improve” the chain’s losses.
Cordes has set a two-year target for Real to “capture its lost market shares and increase its earning power,” which will include cost cutting, increased marketing and faster expansion in Eastern Europe, where economic growth is stronger than in Germany.
“International expansion is a real strength of Real,” said Cordes. “Expansion outside Germany yielded an organic growth plus of more than 5% for Real as a whole in 2007. The task is now to reach breakeven in the international business as fast as possible.”
Real now plans to tap Ukraine as a new market, with the opening of 15 new stores per year throughout Eastern Europe.
“The market environment is difficult for Real, but it is better than its reputation,” said Cordes. “I am confident that we will succeed.”
