KarstadtQuelle turns Q3 profit

German retailer KarstadtQuelle has turned a profit in the third quarter after losing €503.7 million (£341.7 million) in the same quarter last year. The company made an operating profit this quarter of €14.15 million. Sales in July, August and September, however, dropped almost 12 percent to €2.7 billion, compared with the same quarter last year. The company attributes the decline to a weak economy and political uncertainty in the wake of the German election stalemate that had shoppers more cautious than ever.

KarstadtQuelle said that full-year sales would drop by “a mid single-digit� percentage point, however quarterly revenues were slightly higher than analysts had initially expected. Chief executive Thomas Middelhoff told the FT that four of the company's five divisions were performing par with or above expectations. The catalogue business, which is currently undergoing restructuring, is even doing better than last year.

Middelhoff said that the company was embarking on the second phase of reorganisation, having sold a number of non-core businesses. Debt is now down 17 percent to €4.4 billion and the company is on track to cutting it to €3.3 billion by the end of this year, he said. To this end, KarstadtQuelle plans to sell its credit-card service for mail-order customers and the Hypothekenbank, its real estate financing business. These businesses could be sold for as much as €1.3 billion.