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Chilly Christmas for top European retailers

Chilly Christmas for top European retailers
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Cold weather bit into Christmas sales at Germany’s Metro.

The cash and carry group said snow and ice hit fourth-quarter demand but it still expects to post operating profit for last year of 2.3 billion euros.

Britain’s Marks & Spencer said despite the weather it enjoyed better-than-expected sales over Christmas.

But it does not see that trend continuing into 2011 as UK household budgets are squeezed and commodity prices rise.

“We continue to expect the trading conditions ahead to be more challenging as consumers’ disposable incomes come under pressure from increased VAT (sales tax) rates and the impact of public spending cuts,” M&S said in a statement.

“In addition, we are facing increased commodity prices and significantly tougher comparatives,” it added, voicing fears shared by the wider industry over whether retailers can pass on higher costs for key commodities such as wheat and cotton.

M&S estimated the bad weather cut sales of general merchandise by three percent and food by one percent.

Metro, which runs cash & carries, consumer electronics stores, supermarkets and department stores, said trading had picked up once the ice thawed.

It sees profit growth accelerating this year, driven by expansion and the effects of its cost cutting and productivity programme, Metro Chief Executive Eckhard Cordes said in a statement.

Metro’s full-year sales rose 2.6 percent to 67.3 billion euros, missing expectations of a 3.4 percent rise. There was only a slight increase of 1.6 percent in the fourth quarter compared with the 4.2 percent which analysts had forecast.