Eckhard Cordes, the new chief executive at Metro Group, has spent almost 30 years in the automotive industry and will need all his experience to get the German retail giant back firing on all cylinders.
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Cordes, who spent the last 18 months as head of Metro’s largest shareholder, is set to take the top executive job at the company in November after former chairman and CEO Hans-Joachim Körber decided to quit.
Tensions between the two men over the future direction of Metro are believed to be at the root of Körber’s departure. Cordes, as head of German industrial holding Franz Haniel, which owns a 34.2% stake in Metro, clashed with Körber over business strategy.
The details of the disagreements between the two men have never been publicly confirmed, although it is clear that Metro, for all its growth in Asia and Eastern Europe, has a number of problems on its hands, problems that would have hampered margins and irked its largest shareholder.
Metro has had problems in what is a very competitive home market. For a retailer, Germany is a tricky market in which to do business, what with the strength of discounters Aldi and Lidl. Metro’s Real food retail business is struggling, weighed down by restructuring costs, while speculation surrounds the future of its Extra stores. This week, while Metro was busy confirming the Cordes’ appointment, the company also indicated that it is in the process of deciding what to do with its Extra stores, with a sale a possible option.
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By GlobalDataMoreover, if Cordes is keen to improve returns to shareholders, he could follow the likes of Carrefour and free up some cash by selling off part of Metro’s bank of real estate. The proceeds could be split between giving cash back to shareholders and investing in high-growth markets abroad.
Metro, the world’s third-largest retailer by sales, runs 2,400 outlets in 30 countries and was at the forefront of the expansion of multinational retailers into markets like India and China. However, competition in those two countries is heating up; Wal-Mart has moved into the cash-and-carry business in India, while the likes of Carrefour and Tesco are continually ramping up their efforts in China. Cordes may need to accelerate Metro’s moves in the world’s emerging retail markets.
With Cordes, a former DaimlerChrysler executive at the wheel, it will be nothing but an interesting ride ahead for Metro.
