GERMANY: Karstadt Nine Month Loss Shrinks
Europe's biggest department store said sales in the first nine months of the year rose by 4.9 per cent, well above the industry average, to DM20.9bn ($9.01bn).
Higher sales, coupled with a slight improvement in margins and strict control of staff costs resulted in a sharp narrowing of its pre-tax loss to DM138.9m ($60m), compared with DM356.9m in the same period last year.
The share price was 2.18 per cent weaker at 37.65 euros by 09:26 GMT, slipping further off a year high of 41.96 euros on November 3 but still 38 per cent above its June year low.
Dealers said investors were focussing on the loss rather than the full-year outlook, which would take account of Christmas sales.
Karstadt said a loss for the nine-months was normal since sales and earnings usually peak in the fourth quarter.
The Essen-based group said it expected pre-tax profits for the year to rise over 15 per cent from 1999's DM441m, assuming consumer demand does not weaken significantly in the current quarter.
Karstadt said last month it aimed to lift net sales to DM36bn ($15.51bn) by 2003 from DM29bn last year.
In an interview with Die Welt on Saturday, chief executive Wolfgang Urban said the group would press ahead with a strategy to cut costs and increase value with the aim of tripling profit by 2003.
Urban told Die Welt that Karstadt Quelle would halve its stores' floor space from the current one million sq ms.
This would lead to job cuts, he said, but declined to give any details. The company would decide no earlier than early next year whether to close some of its department stores.
Urban also said Karstadt would hold on to its tourism division, reiterating that it had no plans to float a stake in tour operator C&N Touristic AG. But he said a flotation was not ruled out in the future.
C&N is jointly owned by KarstadtQuelle and German airline Lufthansa AG. ($1=2.321 Mark).
(C) Reuters Limited 2000.
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