METRO AG - METRO Group

The preparations for expansion into Poland,
Italy, Hungary and Turkey got under way in 1996.
Praktiker plans to open its first home improvement
centers in these countries in 1997.
Furniture Centers
Falling sales in difficult economic climate
The German furniture retail trade suffered in
1996, especially in the 4th quarter, from continuing
reluctance on the part of the public to
purchase consumer durables. Sales of furniture,
fixtures, fittings and household effects thus
weakened considerably throughout the year,
falling by a nominal 2.7 percent compared
with the preceding year. The sector also faced
the additional burden of generally intensifying
price competition, which increasingly stepped
up pressure on margins and advertising.
Möbel Unger continues restructuring course
The Furniture Centers division’s sales amounted
to DM 1,704 million. Because of the closedown
of 12 Massa stores, division sales decreased by
13.1 percent, declining by 6.5 percent in terms
of comparable selling space.
Möbel Unger is continuing its turnaround and
restructuring program. Owing to closedown and
the disposal of unprofitable stores, the number
of Möbel Unger furniture outlets dropped clearly
from 89 to 63, with selling space receding by
20.6 percent from 843,170 m² to 669,245 m².
At year-end the whole Furniture Centers division
comprised 94 stores with 784,600 m² compared
with 108 outlets with 894,730 m² in the preceding
year. Apart from the Möbel Unger and Massa
outlet chains, 31 stores belonged to the Divi
(29 outlets), Möbel Busch (1 outlet) and Roller/
Luxembourg (1 outlet) furniture stores.
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Logistics and inventory management
streamlining rigorously continued
Apart from the sale of unprofitable stores, activities
focused on optimizing logistics and
merchandise information. For example, Möbel
Unger closed a service and sales center, ten
warehouses and five centers-cum-warehouse.
A new merchandise information system to make
order processing more efficient and on schedule
was put into practice in the fiscal year. As of
January 1, 1997, all logistics services were concentrated
in Unger Service und Logistik GmbH.
Increased sales of self-collection furniture reduced
delivery volumes.
On the marketing level, Möbel Unger refocused
its product range policy along the lines
of regional priorities. In order to create a more
youthful image, the “Young Unger” concept,
with which Unger is seeking to appeal to younger
customers with up-to-date ranges and attractively
presented products, was expanded at
six stores.
In order to improve cost structure, the average
number of employees, translated into
full-timers, fell again, from 6,153 to 5,172.
Capital expenditure of DM 31.5 million is largely
attributable to rationalization measures.