Metro losses narrow after cost cutting

RETAIL giant Metro yesterday posted a smaller than expected first-quarter loss after closing stores to slash costs.

The net loss narrowed to €3m (£2.6m), compared with €16m in the same period last year.

Metro, which runs cash and carries, hypermarkets, electricals and department stores, said first-quarter sales were flat at €15.52bn. The world’s fourth largest retailer, with over 2,100 stores in 33 countries, reiterated that it expects 2011 sales to rise over four per cent and earnings to climb about 10 per cent.

But the company admitted that this depended on a “further improvement of the overall economic situation and the possibility to compensate price increases on the procurement side”.

Since the first-quarter of 2010, the German-owned retailer has closed or sold 26 unprofitable domestic Real supermarkets, Kaufhof department stores and Cash & Carry wholesale outlets and disposed of its Moroccan wholesale unit. Metro said sales fell 2.6 per cent in Germany, which accounts for almost 40 per cent of the total, and were down 1.9 per cent in other western European markets. In contrast, sales climbed 2.5 per cent in eastern Europe, and were up strongly in Asia and Africa.

Chief executive Eckhard Cordes said: “Consumer sentiment in a large part of our portfolio is still fairly weak. Even German consumer confidence has weakened, resulting in a more volatile environment.”

RBS analyst Justin Scarborough, noting first-quarter earnings only accounted for about five per cent of the full-year total, said a big fall in “other losses” underscored a disappointing performance.

The group said in March the Japanese earthquake and unrest in the Arab world could put economic recovery at risk, knocking its shares.