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Retailer Metro warns of slower sales

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11:05 CET+01:00
Metro, the biggest German retailer and number two in Europe, published figures on Thursday showing it had been hit by cautious shopping, and growth slowed in the third quarter.

The group could still reach its full-year earnings targets however, but only if foreign exchange markets remained stable and the Christmas shopping season was "reasonable," Metro boss Eckhard Cordes told a telephone news conference.

Net profit rose to €183 million ($241.5 million), compared with a loss of €68 million 12 months earlier owing to exceptional items. Metro shares surged in early trading on the news, gaining 5.45 percent to €23.20, while the Dax index was up by 2.08 percent overall.

Between July and September, Metro sales climbed by 6.7 percent to €16.3 billion, "less rapidly than in previous quarters and less than we had expected," Cordes said. He pointed to "consumer anxiety" as a result of the international financial crisis.

The retail sector is one of the first affected in economic slowdowns and consumers smothered by bleak economic news have begun to think twice before making purchases.

More than 60 percent of Metro's sales come from outside Germany and have suffered in particular in countries where housing markets have collapsed, Cordes said. Its Saturn and Media Markt stores, which sell televisions, computers and stereo systems, reported a 6.0 percent drop in third quarter operating profit.

But the Real supermarket chain, which has been a millstone around Metro's neck, turned in strong results, boosting the entire group, Cordes noted. Metro is still looking however for a buyer for its Kaufhof department stores, the results of which continued to stagnate.

For 2009, Metro declined to provide an outlook, owing to "foggy" conditions.

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