Germany's biggest retail conglomerate Metro has suffered heavy net losses in the first quarter of this year. The company's new chief executive, however, defended major investments, which he thinks will pay off soon.
German retail giant Metro suffered a net loss in the first quarter of 2012, the group announced on Thursday. The company logged 82 million euros ($108 million) in the red for the first three months of the year, far exceeding the three-million-euro loss seen in the same period a year earlier.
Metro stocks dropped by 3.5 percent on the news in early Thursday trading. The group attributed the poor results to expansion costs and extensive investments under the new CEO Olaf Koch who, in the beginning of the year, replaced a predecessor at loggerheads with Metro's main shareholders.
"In the past few months, we've invested heavily in better price structures and customer service," Koch said in a statement. He said the move was beginning to pay off as revenues rose by 2.2 percent to 15.6 billion euros between January and March.
Impact of the European crisis
Contributing to Metro's boost in sales were all of its subsidiaries, notably the Metro wholesale operation, plus consumer electronics chains Media Markt and Saturn, as well as the Real and Kaufhof retail stores.
In terms of revenues, Metro fared better than Europe's biggest retail group, Carrefour of France, which saw its first-quarter turnover dip by 2.1 percent.
Metro announced it had cut its 2012 investment budget by 200 million euros to 1.8 billion euros. The company said it would scrap earlier plans to enter the Indonesian market with its Cash &Carry retail stores.
hg/gb (dapd, Reuters, AFP)