Three top EU retailers show consumerism fragile

Frankfurt/Stockholm: Consumer spending is fragile across Europe, trading updates from three major retailers showed on Monday, though Germany's Arcandor lifted the gloom by keeping its growth forecast for next year.

Arcandor, which makes most of its profits from a 52 per cent stake in tourism group Thomas Cook, said conditions for its retail businesses - department stores chain Karstadt and home shopping unit Primondo - were challenging.

This chimed with monthly sales data from Hennes & Mauritz, Europe's second-biggest clothing retailer, which posted a 4 per cent year-on-year drop in underlying sales for Nov-ember, near the bottom of analysts' forecasts.

British-based car retailer Inchcape also warned its 2009 profits would be weaker than expected.

"It's really tough out there, and Germany isn't immune," said Daniel Lucht, analyst at retail researchers Verdict.

Europe's retailers are struggling as consumers rein in spending amid fears of recession and rising unemployment.

Personal debt

Some commentators have suggested that Germany, Europe's biggest economy, might be more resilient to the downturn than neighbours such as Britain, which has higher levels of personal debt and an economy more exposed to financial services.

German retail industry body HDE said on Sunday a poll showed shoppers little affected by the downturn so far. However, the Bundesbank said yesterday that German consumer sentiment was set to suffer in the coming months.

Arcandor said adjusted, operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose 19 per cent to 820.2 million euros (Dh4.04 billion) in the year ended September, topping its target of 800 million euros.

Arcandor shares, which have plunged over 80 per cent this year on concerns over weak trading at Karstadt and its debt pile, jumped as much as 8.2 per cent to 2.76 euros.

Thomas Cook accounted for about 60 per cent of sales and 90 per cent of operating profit.