Metro to sell Real hypermarkets to focus on wholesale
German retailer Metro AG has decided to sell its struggling Real hypermarkets to focus on its wholesale business, the company said in a statement on Thursday.
Olaf Koch, Metro's chief executive since 2012, has sought to focus the once sprawling conglomerate on its core cash-and-carry business in recent years, and has already sold its Kaufhof department stores and split from consumer electronics retailer Ceconomy.
The strategy has, however, failed to boost Metro's share price, which tumbled in April when it cut its outlook due to poor performance at its Russian operations.
Metro has tried to sell Real in the past, but was unable to find a buyer for the unit, which posted a loss and saw sales slide 7.2 percent in the latest quarter, something it blamed on an early Easter and unusually hot weather.
Foreign players have shunned the German grocery market, dominated by discounters Aldi and Lidl, since Walmart pulled out of the country in 2006. The American retailer took a loss of $1 billion when it sold its stores to Metro, which rebranded them under the Real banner.
Some industry observers have speculated that Amazon could be interested in food retailers in Germany, its second biggest market after the United States, after its acquisition of Whole Foods supermarkets last year.
Metro could also find itself changing hands. Late last month, family-owned German investment group Haniel agreed to sell a 7.3 percent stake in the company to a Czech-Slovak investor group, with the option of selling the rest of its holding at a later date.
Should the investors - Czech billionaire Daniel Kretinsky and Slovak investor Patrik Tkac - acquire the full Haniel stake, they would own 31.5 percent, above the 30 percent threshold which under German law would require them to bid for the whole company.
After the announcement that Haniel had agreed to sell the Metro stake, analysts speculated that the new investors may put pressure on Metro to dispose of Real.
Real, with 282 stores and 34,000 staff, has sought to build up an e-commerce operation in recent years, with online orders now accounting for 2 percent of sales. It has also clashed with trade unions when trying to implement lower pay for new hires.
Its total sales fell by 3.1 percent to 7.2 billion euros in the 2016/17 financial year.
© Thomson Reuters 2018 All rights reserved.