Metro AG, Germany’s largest retailer, will cut 15,000 jobs as part of a plan to increase profit by ¤1.5 billion ($2 billion) over four years.
The reductions account for about 5 per cent of the workforce and Metro hasn’t decided how they’ll be distributed across the company’s divisions, a person with knowledge of the situation said, declining to be identified because the plans are private. Metro will “largely” use attrition, not firings, to lower headcount by 15,000, the company said in a subsequent statement.
The Dusseldorf-based retailer said last night that it would allow managers more autonomy over their local markets, which range from Turkey to Russia. A week ago, Metro reported slowing sales growth and profit that missed its own forecast as consumer confidence withered in both Germany and eastern Europe.
“This is certainly good news, and they should be able to save as much as they say they will through job reductions,” Alexander Schlipf, an analyst at Bankhaus Metzler in Frankfurt, said by phone. “As for streamlining operations, they didn’t give any details today. I’m not sure they even have very clear plan at the moment.”
Metro will reduce its global 300,000 workforce by 15,000 mostly by not replacing workers who quit or retire rather than by firing employees, spokesman Ruediger Stahlschmidt said by telephone. Half of the company’s “potential” to improve profit by ¤1.5 billion by 2012 comes from the job reductions, while the other half should be achieved through more effectively managed operations, he said.
“This plan has huge potential,” Deutsche Bank AG analyst James Collins said in a note today, calling Metro’s operations “massively bureaucratic.” Managers led by Chief Executive Officer Eckhard Cordes are “really getting to grips with decentralising an over-complex, high-cost group structure,” Collins said.
