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KarstadtQuelle Net Slips, Names Middelhoff as CEO

BERLIN — KarstadtQuelle posted declining profits on weak sales in the first quarter, but Germany's troubled department store and mail order group said that its extensive restructuring program "remains on track."<BR><BR>Europe's largest department...

BERLIN — KarstadtQuelle posted declining profits on weak sales in the first quarter, but Germany’s troubled department store and mail order group said that its extensive restructuring program “remains on track.”

Europe’s largest department store and mail order company reported earnings as it named chairman of the supervisory board, Thomas Middelhoff, to be chief executive officer. Middelhoff replaces Christoph Achenbach, who resigned in April.

In other management changes, Hero Brahms, a member of the supervisory board, will succeed Middelhoff as board chairman. Chief financial officer Harald Pinger, who temporarily assumed Achenbach’s responsibilities, will now additionally oversee the mail order business. Arwed Fischer, the board member in charge of the mail order business, will leave the company. All changes were effective May 12.

In the earnings report, the company said earnings before interest, tax, depreciation and amortization of goodwill (adjusted for special factors resulting from restructuring) dropped 18.4 percent to 73.4 million euros, or $96.3 million, in the quarter. However, group’s unadjusted EBITDA was “better than planned,” the company said. Group sales fell 8.4 percent to 2.97 billion euros, or $3.9 billion.

Dollar figures are converted at the average exchange rate.

Over-the-counter retail sales dropped 6.8 percent to 1.18 billion euros, or $1.55 billion. The group’s new core portfolio of 89 large Karstadt department stores and 32 sporting goods stores saw sales drop by 5.2 percent, or, according to the company “almost according to plan.” The group’s smaller department stores and specialty chains, which include SinnLeffers,Wehmeyer, Runners Point and Golf House, are expected to be sold by the end of 2005.

Meanwhile, catalogue sales remained hard hit, declining 9.5 percent to 1.92 billion euros, or $2.52 billion, but EBITDA in the segment significantly improved, reaching 14.4 million euros, or $18.3 million, which compares with a loss of 42,000 euros, or $55,100, in the prior year.