Dusseldorf, Germany, July 31 - Metro swung to a second-quarter operating loss due in part to the revaluation of its Adler unit, even though sales defied weak consumer demand in Europe's biggest economy to grow 6.9 percent.
Metro, a bellwether of German economic health, said on Thursday losses before interest and tax (EBIT loss) amounted to 282 million euros ($439.5 million), compared with a profit of 303 million in the same period last year.
Sales rose 6.9 percent to 16 billion, driven by international sales and brisk business at Metro Cash & Carry stores as well as electronics chains Media Markt and Saturn in Germany.
Metro, Germany's biggest retailer, said second quarter EBIT before special items was up 8.6 percent to 329 million euros.
Eighteen analysts polled by Reuters had expected on average EBIT of 329 million euros and sales of 16 billion.
They were polled before Metro said last week that it was accelerating the disposal of its Adler fashion stores, a move which it said would affect first-half results. [ID:nL5635410]
"We managed to continue our strong growth in an increasing difficult economic environment," chief executive Eckhard Cordes said in a statement.
Metro said its 2008 earnings target remains unchanged with growth of 6 to 8 percent before special items and a rise of over 6 percent in sales.
It said expenses resulting from the streamlining of its Real store network and Adler's revaluation were not included in the outlook. It has to book around 600 million euros in related expenses, according to the second quarter report.
Metro shares trade at around 12 times predicted 2009 earnings, lower than U.K retailer Tesco and German fragrance-to-fashion retailer Douglas at 13 times and 12 times respectively, but higher than Arcandor on 6 times.
Retail sales growth in Germany rose 1.5 percent on the month in May, while surging food and energy costs have pushed inflation above 3 percent to a 15-year high, underpinning fears that German consumption will slow.
German consumers have become more downbeat than at any time since the recession year of 2003, because of inflation and worries about the financial crisis, the GfK market research group said earlier this month.
Retailers have been feeling the pinch, with the DJ Stoxx European retail sector index <.SXRP> falling over 30 percent since the start of the year after a difficult Christmas period.