Metro hails retail recovery

 
City A.M. Reporter
METRO, the world's fourth biggest retailer, lifted its investment budget amid growing confidence about economic recovery, as cost cutting helped it to meet quarterly earnings forecasts despite sluggish sales.

The German group, which runs cash and carries, supermarkets, electrical goods and department stores, said on Monday it was lifting its capital spending budget for this year to 2.1bn euros (£1.7 bn) from 1.9 billion euros.

"The economic recovery trend is consolidating," said Chief Executive Eckhard Cordes, while cautioning that "the crisis is not over yet."

"The increase of the capital expenditure budget is a sign of our confidence: we are focussing more on growth and expansion again – the period of caution is over."

Europe's shoppers have been slow to respond to an economic recovery, though there are signs this is changing. The European Commission said last week its economic sentiment indicator for the euro zone hit a 28-month high in July.

Metro, with over 2,100 stores in 34 countries in Europe, Africa and Asia, is relying on its Shape 2012 programme of cost cutting and productivity improvements to help boost earnings.

The plan, launched in January 2009, aims to cut 15,000 jobs and boost profits by 1.5bn euros by 2012.

Earnings before interest, tax and one off items rose 6 per cent to 334m euros in the three months ended June, in line with analysts' expectations.

Sales climbed 2.4 percent to 15.7 bn euros.

That was up from 2.3 per cent growth in the first quarter, though excluding currency moves, growth slowed to 0.2 per cent from one per cent, as eastern European markets in particular remained sluggish.

Metro, which is expanding its cash and carries and electricals stores into emerging markets, said its full-year expectations for a tangible, but otherwise unspecified, increase in earnings, was unchanged.