Germany’s largest electronics retailer is focusing on new offers in the areas of gaming and health. This should bring additional growth. In Germany of all places, business has recently stagnated.
The return of customers to the shopping streets and massive advertising have given Germany’s largest electronics retailer Ceconomy (Media Markt, Saturn) a tailwind in the Christmas business. The group increased its sales in the first quarter of the 2022/23 financial year (October to December) by 3.1 percent to 7.1 billion euros, as it announced.
Adjusted for currency and portfolio effects, sales increased by as much as 4.9 percent. Sales thus significantly exceeded the pre-Corona level. However, the group only grew abroad. Business stagnated on the important German home market.
“We got off to a good start in the new financial year. Our good preparation for the Christmas business has paid off and generated a lot of customer demand,” said CEO Karsten Wildberger. Across Europe, the group has grown faster than the market – and Ceconomy has also been able to keep its sales stable on the recently shrinking German market for electrical appliances and thus gained market share.
However, the wave of inflation did not leave Ceconomy untouched. Not least due to the higher costs caused by inflation, the adjusted operating result (EBIT) fell from 274 million to 224 million euros. The bottom line was a profit of 127 million euros, 3.7 percent more than in the previous year.
A good quarter of the total turnover – around 1.8 billion euros – was accounted for by the online business. Although online sales were almost 5 percent below the previous year’s level, they were still almost twice as high as before the corona pandemic.
Group relies on service business
Ceconomy expects future growth impulses from the expansion of the range in new product categories such as gaming or health. The company also has high hopes for the fast-growing service business with device repairs, mobile phone contracts, insurance and device rentals. In the Christmas quarter, sales here were 14.5 percent above the previous year’s level.
However, Ceconomy will part with the 29 Media Markt stores in Sweden. They will be sold to the northern European competitor Power International AS, as announced by Wildberger. In return, the company will receive a 20 percent stake in the Swedish subsidiary Power Sweden. Ceconomy expects the sale to have a negative effect in the mid double-digit million euro range. However, this has no influence on the forecast for the year.
Source: Stern
