Christmas Quarter Arcandors Retail Segments Slightly Above Previous Year

Arcandor - January 2009

 

The Arcandor Group has enjoyed a solid business performance in the first quarter of the 2008/2009 fiscal year as demonstrated by the preliminary figures. The three operating segments of Thomas Cook, Primondo and Karstadt posted a good performance in the period from October to December 2008 in the light of the difficult market environment. The total sales of the retail segments Karstadt and Primondo amounted to €2.57 billion and were slightly above previous year's level.

"The Christmas quarter was stable in our retail segments. General expectations of poor retail Christmas business proved wrong for Primondo and Karstadt," commented Dr. Thomas Middelhoff, Chairman of the Management Board of Arcandor AG, on the business performance. "In their most important quarter of the 2008/2009 fiscal year, our retail segments Primondo and Karstadt particularly as a result of their restructuring have proved robust in an extraordinarily challenging envi-ronment. Together with the cost-cutting measures of the 'Pact for the Future', which will have an increasingly positive effect on performance over the year, this has provided a good foundation."

As the main shareholder of the listed Thomas Cook Group plc, Arcandor is highly satisfied with the performance of its tour operating subsidiary. Following the announcement by Thomas Cook on December 2, 2008, Arcandor noted with satisfaction that business is developing in line with expectations for the tour operating group and that management is aiming for further growth in margins in 2009 and 2010 and an operating profit of £480 million in 2010. No further information is currently available owing to the stock exchange listing of Thomas Cook Group plc in London.

Adjusted sales of the Primondo Group amounted to €1.22 billion for the quarter, a slight increase of 0.1%. In December 2008, Primondo saw a significant improvement in sales which more than compensated for the weaker months of October and November. In this context, the strong sales growth of Quelle Germany in the key month of December was particularly encouraging. The growth areas of e-commerce, international business and TV home shopping, which were expanded considerably as part of Primondo's restructuring, also contributed substantially to the positive business trend. The consistent transformation of Quelle into an online provider is paying off. E-commerce grew by more than 30% in December, more than offsetting the structurally driven reduction in Quelle's catalogue business in Germany in this crucial month. Quelle's international business again grew strongly and rose by more than 15% in the first quarter. HSE24 enjoyed another successful quarter with sales rising by 3%. However, specialty mail order did not match the previous year's sales level.

In the first quarter of the 2008/2009 fiscal year, Karstadt generated adjusted sales of €1.27 billion in its department store business, a slight increase of 0.1%. A positive sales trend was recorded in fashion, which grew by over 4%. Karstadt thus gained market share in its most important consumer area. The sports segment also increased its sales. Sales declines were seen in the areas of multimedia and catering. However, this is partially due to the targeted reduction of unprofitable sales space. In the overall Karstadt segment (including food and restaurants) adjusted sales remained stable year-on-year at €1.35 billion.

The Arcandor Group prepared for a difficult 2008/2009 fiscal year early on and took measures to offset potential economic pressure on sales through flexibility, efficiency enhancements and cost cutting.

"The most important quarter for Primondo and Karstadt is now behind us. Despite the difficult economic environment, trading was successful and our retail segments are now in a good position as we move into the rest of the fiscal year. The fourth quarter - July to September 2009 is the most important for Thomas Cook. The announcements published so far indicate that our tour operating business is developing well according to plan. Thomas Cook Management is therefore confident of achieving its targets. Given that recession will remain within current forecasts, we are cautiously optimistic for our ongoing business performance," stated Middelhoff.