KarstadtQuelle steps up revamp
German retail group to sell off assets this year
KarstadtQuelle is to speed up the process of restructuring the business as it works to restore sales.
KarstadtQuelle said it expects offers from potential buyers for 75 small department stores earmarked for sale, imminently, aiming to reach an agreement in the third quarter of 2005. Several letters of intent have already been received from buyers of its SinnLeffers, Wehmeyer, Runners Point and Golf House specialty stores.
Thomas Cook, the European tour operator that KarstadtQuelle has a 50 per cent stake in, seems set to remain with the company for the time being despite reports that it might be sold.
Harald Pinger, the group’s finance chief, who replaced chief executive Christoph Achenbach on an interim basis after Achenbach’s resignation last week, said the company expects to return to sales growth next year.
Pinger said: “Today our financial position is sound and assured, the reorganization which we initiated in September 2004 is on track, and, with these initial successes behind us, we will continue to consistently implement the program in 2005.
“We have acted decisively and proactively in the year of crisis 2004 to make a fresh start. 2005 will be a year of implementation, and here we are partly performing better than planned. From 2006 onwards, the KarstadtQuelle Group with its totally new profile will achieve growth again.”
Earnings in the 2004 financial year were better than planned, despite the impact of weak domestic demand, and high unemployment in Germany .
[img r]karstadt.jpg[/img]Total sales were €13.45 bn, ahead of forecasts with the group making a loss of €1.63bn.
The ‘over-the-counter’ retail business, made up of 220 department and sports stores in German city centres, saw sales of €5.7bn, with department store sales down 5.6 per cent.
The Quelle mail order business saw sales of €7.4bn, down 6.8 per cent, with speciality catalogues improving sales by 0.8 per cent, but the core catalogues down 11.3 per cent. Sales in markets outside Germany improved by 2.6 per cent, with foreign markets, including the UK, accounting for 26.5 per cent of total mail order sales. The e-commerce business saw sales growth of 11.8 per cent to €1.71bn.
In the first quarter of 2005 KarstadtQuelle said it gained ground in February and March, following a weak start in January. Group sales in the first quarter were about 5 per cent below plan.
