Metro AG Chief Executive Officer Olaf Koch said Germany’s largest retailer is giving local managers more leeway to come up with potential acquisitions as it seeks to reinvest the proceeds of its $3.2 billion sale of the Galeria Kaufhof department store chain.
“We have been waiting for such funds to come to the company,” Koch said in an interview with Bloomberg Television at the World Retail Congress in Rome Thursday. “Now that we have them, I think we have a lot of good ideas of what we can do: a bit of M&A, small targets, not huge targets, selective and regional targets. Our business is very local.”
Metro said last month it’s hunting further targets after agreeing to buy Classic Fine Foods Group, a Singapore-based supplier of gourmet products, for as much as $328 million. Selling the 136-year-old Kaufhof chain to Canada’s Hudson’s Bay Co. has furnished cash for future investments to fill holes in its portfolio, Koch said.
“Take Italy - the team now has the task to anticipate how the market will develop to 2020,” the CEO said. “Then, the question is what is missing, what Metro needs to add in capability, services, and technology, and then start to figure out: are there potential partners for this? To team up or for acquisitions?”
Metro has found a partner in China, where it has 82 wholesale stores for restaurateurs and hoteliers. This week it started selling packaged food and coffee on Alibaba Group Holding Ltd.’s Tmall site. Metro can withstand an economic slowdown in China by standing for German quality and food safety, Koch said.
“Yes, of course we are exposed the macroeconomic developments, but we were able to position Metro as the trust brand of quality regarding food safety,” the CEO said. “So even in this difficult time we are doing well."
Koch also defended Metro’s home base in Germany, where sales have declined in recent years.
“Germany is blessed with a very good economic development, salaries growing with a very low unemployment. That’s why the overall consumption is growing,” he said in Rome. “The food sector is so competitive that we don’t even have a deflation tendency right now.”
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