Friday May 16, 10:15 AM
Metro CEO says he is 'confident' Real will achieve turnaround soon
DUSSELDORF, Germany (Thomson Financial) - Metro AG (Xetra: 725750 - news) .'s chief executive Eckhard Cordes said he is 'confident' the company's Real (Frankfurt: BJU.F - news) hypermarket chain will manage a turnaround and reach break-even as soon as possible.
But he also affirmed the chain will not reach its target of 3 percent EBIT margin -- earnings before interest and tax as a percentage of sales -- by 2009, according to a copy of a speech he is to hold at Metro's annual general meeting.
Metro previously said it will consider all options for its Real stores if the unit fails to make a turnaround within two years via a restructuring program that includes new branding and cost cuts.
'We must continue to cut costs,' Cordes said.
'Without easing financial pressures, the turnaround at Real will not work.'
The company has identified 40 unprofitable outlets and is already in talks with the works council to shut down the stores.
Cordes also affirmed that the company is reviewing options for its Kaufhof chain of department stores, and that there is 'no reason to rush this process.'
Metro earlier this year said it no longer sees Kaufhof as part of its core business and will examine all options for the division. Analysts value the chain at about 3 billion euros, of which 2 billion euros are accounted for by real estate.
Rival Arcandor AG.'s chief executive Thomas Middelhoff has said his company would be interested in buying Kaufhof's operating business, but both companies have said there have so far been no talks on the matter.
Cordes also said the German retailing giant still expects sales to grow more than 6 percent this year, with EBIT growth between 6 and 8 percent excluding acquisitions and other one-time effects.
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