Achieving what analysts described as an “encouraging” valuation for the loss-making business, Metro will sell the 245-store chain on July 1 in a deal that will reduce Metro’s net debt by €350 million (£260.5 million). The price was not disclosed.
It is estimated that Extra, which generated turnover of €1.6 billion (£1.19 billion) in 2007, made an operating loss of €30 million (£22.3 million) in the year.
Metro said the deal leaves it with a “clear focus” on its hypermarkets division, including Real in Germany and Poland.
“The sale of Extra enables us to concentrate our food retailing operations solely on Real and thereby focus our resources more effectively on the further successful repositioning in Germany,” said Metro chief executive Dr Eckhard Cordes.
Cordes took the reins at Metro in November following the departure of Dr Hans-Joachim Körber, fuelling speculation that both Real and Extra would be sold.
Planet Retail global research director Bryan Roberts said the decision highlights the tougher regime of the new management after Metro spent the best part of a decade failing to revive Extra.
“It leaves it to focus on its better-performing Cash & Carry and electricals businesses, as well as smaller grocery formats,” said Roberts. “It proves there are no sacred cows.” He added that the next disposal is likely to be the underperforming department store group Galleria Kaufhof.
Earlier this month, Metro posted record sales growth in the year to December 31, with group sales up 10 per cent to €65.9 billion (£49.04 billion). Sales at its Cash & Carry division rose 6 per cent, while Real’s sales soared 21 per cent – aided by the acquisition of Wal-Mart Germany and Géant in Poland. Sales at the electronics arm, comprising Media Markt and Saturn, climbed 13 per cent.
Roberts added: “The old management were more forgiving and patient. The new management are more ruthless.”
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