The German retail group posted a 7.5 percent sales increase last year to €59,882 million, marking the strongest growth since 1998. The growth rate was 6.6 percent excluding acquisitions. It was driven by the steady expansion of its cash & carry business, especially in Eastern Europe and Asia where Metro stores are a big factor in the national sporting goods market, and by its electronics chains, Media Markt and Saturn. Earnings before interest and taxes (EBIT) increased from €1,738 to 1,983 million – and much more than half of that was secured by the cash & carry business.
The Metro Group’s turnover grew in the German home market by only 1.8 percent to €26,427 million, compared with increases of 8.1 percent to €19,439 million in other parts of Western Europe and of 18.6 percent to €12,592 million in the Eastern part of the continent.
Kaufhof, the German department store chain, which operates 13 sporting goods stores under the Sportarena flag, increased its sales by 0.9 percent to €3,609 million, with some of the increase coming from its investment in Galeria Inno in Belgium, whose sales were up by 7.7 percent. The operating profit increased by 18.1 percent to €82 million.
Kaufhof operates 113 department stores in Germany plus 15 in Belgium. It also runs 13 large sports stores in Germany under the Kaufhof Sportarena flag. All the Sportarena stores have received a major lifting in the past couple of years, leading to higher profitability. The latest refit concerned the store in Cologne, which now has 4,000 square meters of selling surface on four floors. The 5,000-sqm. Sportarena in Frankfurt will be next in August.
In Germany, Metro Cash & Carry occasionally publicizes the availability of sports items by well-known brands like Converse, Puma and Lacoste. That’s not new, and these goods are said to be originating mostly out of grey channels in Eastern Europe. Most recently, however, rather technical products appeared on Metro’s shelves and in its ads to the horror of companies like Salewa, Schöffel and Lowa.
The tricky thing is that, according to a Schöffel release, the products did not come from obscure channels but were first sold by the brands to a German Intersport dealer located in Westphalia. The dealer said that it had placed the order in behalf of a major media enterprise for use by its employees. The quantities ordered were minimal, but they were sufficient to allow Metro to advertise them, upgrading its image.
The image of the brands and of Intersport has taken a beating from this feat, amply reported in the German trade press. Intersport officials have expressed their discontent, but indicated that they would have a hard time ousting a retail member dealing with the mass merchants as long as it continues to pay its invoices and doesn’t repeat this mistake.