Officials for German troubled department store chain KarstadtQuelle said Tuesday they skidded into the red in 2004, but added they were more confident for the current year.
KarstadtQuelle officials believe they've caught a life belt
KarstadtQuelle executives told their annual earnings news conference that they turned in a loss of 191 million euros ($248 million) before tax and amortisation (EBTA) in 2004, compared with a profit of nine million euros a year earlier.
Nevertheless, the year-end loss was not so wide as expected: In November, KarstadtQuelle had forecast a loss of 280-295 million euros for 2004. Full-year revenues were down 6.8 percent at 13.45 billion euros, the group said.
The new year has also not started particuarly favorably, with revenues falling by 8.6 percent in the first three months.
Slight decline expected
Looking ahead to the full year, KarstadtQuelle was penciling in a decline in sales of "the low to mid-single percentage digit range," officials said.
A Karstadt department store in Düsseldorf
Nevertheless, operating profit, as measured by earnings before interest, tax, depreciation and amortization (EBITDA), was expected to amount to "more than 500 million euros."
"In 2004, KarstadtQuelle fell into the gravest crisis in its history," said chief financial officer Harald Pinger, currently acting as interim chairman while a successor is sought for Christoph Achenbach who quit last week.
Restructuring proceeding well?
Nevertheless, "the restructuring of our group is proceeding well," Pinger said.
"2005 will be a year of the implementation (of that restructuring) and in some areas we're ahead of plan," he continued. "From 2006, we'll be able to achieve growth again."
As part of the vast restructuring plan aimed at turning the group around, KarstadtQuelle is selling off nearly half of its department stores, slashing 5,500 jobs and divesting its specialist retail stores.
Additional sale-boosting measures
Pinger said that "additional measures" would be implemented "in order to boost sales." But he declined to reveal any details.
Regarding the sale of 75 of its department stores, KarstadtQuelle said it expected a deal to be reached "in the third quarter of this year."
Only two stores have so far been sold, but press reports suggested that private equity firm BC Partners is interested in buying the other 73 stores. So far, divestments had raised around 400 million euros for KarstadtQuelle, it said.