Wholesaler Metro has said that the difficulties in its Russia business seem to be alleviating, saying that thanks to the introduction of 'suitable measures' to turn the Russian business around, the decline in sales there 'slowed significantly' in Q3.
Metro's Russia operation reported a like-for-like 3.2% decline in sales for the third quarter (-19.5% if negative currency effects are included). Like-for-like sales in Russia were down 7.0% for the first nine months of the year (-16.4% incl. currency effects).
"Russia is and will remain an important market for Metro," chief executive Olaf Koch said in a statement.
"The measures taken have started to impact sales and earnings. On this improved basis, we will consistently continue our efforts in Russia."
Wholesale Operation
But the Russia performance is a blip on an otherwise positive result for Metro's wholesale operation, which saw like-for-like sales rise 1.2% in the first nine months of the year, fuelled by strong performances in Germany, Eastern Europe and Asia.
In the third quarter, like-for-like sales at the wholesale operation were up 1.0%, or -2.8% including negative currency effects.
Its Germany wholesale business posted a 1.2% increase in like-for-like sales in the first nine months, although saw a 1.7% decline in sales in Q3, due to the Easter calendar shift. Reported sales were down 2.4%.
Its wholesale delivery operation 'showed very positive momentum', Metro said, with sales rising 17% to €3.9 billion in the first nine months of the year, largely due to the acquisition of Pro à Pro. Delivery sales accounted to 18% of total sales in the third quarter of the year.
Hypermarket Business
Metro's Real hypermarket arm posted a 1.0% decline in like-for-like sales in the nine month period (reported sales were down 1.5%), with like-for-likes down 6.6% in the third quarter of the year.
Metro cited a number of factors for Real's performance in the period, including what it described as a 'contracting stationary business', as well as the Easter calendar effects and a 'temporarily limited availability of goods'.
Online sales at Real, however, performed strongly, rising by 34% over the nine month period, and 30% in Q3. Online sales now account for around 2% of Real's sales.
Overall, Metro's like-for-like sales were up 0.7% (-1.4% in reported terms ) to €27.6 billion. Like-for-like sales were down 0.5% in the third quarter of the year, primarily due to the Easter shift.
“The third quarter confirms the positive trend in the vast majority of our business entities," said Koch.
"It also shows that we can correct individual negative developments rapidly and effectively. We have continued the positive like-for-like sales trend in our wholesale segment, which accounts for 80% of our business activities in terms of sales."
Looking Ahead
Metro said that it anticipates a growth rate of a minimum 0.5% in the financial year 2017/18, however it anticipates that the Russia business will see sales 'considerably below' the previous year.
Commenting on Metro's performance, Barclays European Food Retail Equity Research said, "EBIT was slightly better than our and the consensus estimate in 3Q mainly due to better than expected performance at the Cash & Carry division, while performance at Real was lower than anticipated mainly due to weak top line performance and the termination of the temporary tariff agreement."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
