After two years of stagnating profit and a thwarted initial public offering of its Russian unit, Metro AG chief executive officer Olaf Koch says life is about to get better for Germany’s biggest retailer.
Soon to start his fifth year at the helm, Koch is eager to reap the benefits of actions that have included the sale of its iconic department-store chain, startup investments and an e-commerce push. He’s also on the lookout for acquisitions.
“The fun part starts now,” the 45-year-old former Daimler AG executive said in an interview in Bloomberg’s Frankfurt office. “The last two years have been anything but funny. We’re now in strong and healthy shape after years of adjustment.”
Investors will get a window into the CEO’s progress on Tuesday when Metro reports Christmas season sales. After international sanctions foiled its plan to list its Russian Cash & Carry unit on the stock market last year, recent news has been better. The company has signalled a robust holiday season, and a surprise dividend increase 25 November helped fuel a 5.6 per cent gain in its shares this year.
After years of under-investment, Metro is playing catch-up in a market transformed by the advances of online retailing. Koch is using €1.75 billion ($1.9 billion) cash from the sale of the Galeria Kaufhof chain to cut debt, invest in e-commerce and make Metro’s 2,000 stores more attractive.
Takeovers also form part of Koch’s plan. Early next year, Metro plans to announce a company-wide initiative to scout investment in startups to help it get closer to the restaurants, hoteliers and independent grocers who patronize its stores, Koch said.
“In the old way of retail, we controlled the chain in terms of data and information,” Koch said. “Today that’s totally turned around,” with consumers able to research products and compare prices from their smartphone, he said.
“This is a business that failed to modernize for a very long time,” said Richard Clarke, an analyst at Sanford C. Bernstein, which has an outperform rating on the shares. “It makes sense that they’re trying to get ahead of the competition and modernize as fast as they can.”
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