Europe’s largest electronics retailer Ceconomy warned investors late on Tuesday night it will miss its 2018 profit targets, blaming the hot summer and a slower-than-expected implementation of unspecified “strategic initiatives” in Germany.
The Düsseldorf-based retailer, which operates Media Markt and Saturn-branded electronics stores in Germany as well as shops in 13 other European countries, now expects earnings before interest, taxes, depreciation and amortisation (Ebitda) and earnings before interest and tax (Ebit) to be lower than in the previous business year. Previously, the company expected an increase in the low- to mid-single- digit percentage range.
Ceconomy said Ebitda is likely to be between €680m and €710m compared with €714m in 2017, while Ebit is now forecast at €460m to €490m, down from €494m last year. At the midpoint, the new targets are around 5 per cent below average analyst expectations, according to S&P Global Market Intelligence.
Ceconomy, which was spun out of German retail conglomerate Metro a year ago, said the deterioration “mainly” results from poor summer sales in Germany.
“The unusual hot weather in July and August led to significant sales and earnings pressure,” the company said in a statement, and added that the execution of strategic initiatives in Germany was slower than expected, too.
The company nonetheless confirmed its revenue guidance for a slight in increase in total sales compared to 2017 and a corresponding slight improvement in net working capital.
Ceconomy’s share price has fallen more than 45 per cent so far in 2018, underperforming the broader German stock market. The group, which analysts expect to generate €21.8bn in revenue this year, has a market capitalisation of €2.4bn.
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