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Wal Mart: Bye, Germany

Düsseldorf - The empire gives up: After eight years of market presence and immense losses, Wal Mart is leaving Germany again. The US department store giant, the world's largest retail group, is selling its 85 supermarkets to the Düsseldorf Metro Group and is expecting a pre-tax loss of one billion dollars.

Metro, in Germany the clear number one in retail, now wants to renovate the supermarkets and help them get back on their feet by buying their own, also very ailing subsidiary Real.

In the world a giant, in Germany a dwarf

"Wal-Mart was too small to get into a green branch in Germany alone," commented a German industry analyst on the move.

With this, Wal-Mart is drawing the line under the failed project of gaining a foothold in the highly competitive German retail trade - probably the most difficult market in Europe due to the ongoing price wars. The US group took over Wertkauf and Interspar stores in 1998 and has only accumulated losses since then. The concept that was very successful in the USA and other countries, namely to dominate the market with gigantic stores on the green field and competitive prices, did not work from day one. The corporate management has admitted that they underestimated the difficulties. The retail margins in Germany are among the lowest in an international comparison. Long-established discounters like Aldi or Lidl had already occupied the best locations and could easily keep up with the Americans in terms of price. In any case, the low-cost chains hardly differ in terms of service, as consumer advocates criticize.

Metro: "Ideal addition"

Metro boss Hans-Joachim Körber called the takeover an "ideal addition" to the branch network of the subsidiary Real. The company would have liked to have had more time with the transaction, but Wal-Mart wanted to quickly part with the unpopular business. Real recently suffered massive losses after a scandal over incorrectly labeled meat.

A spokeswoman for the German Federal Cartel Office said the takeover was probably an issue for the EU Commission in Brussels because of the size of the turnover.

Wal Mart has more than 1.8 million employees worldwide and last had a turnover of 312.4 billion dollars (245 billion euros). The group operates in the USA, Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the UK. In total, it operates more than 6600 stores worldwide. (Reuters, AP, szem, DER STANDARD print edition, July 29, 2006)