Tengelmann Group takes stockPrint

Anniversary year falls short of strong development in preceding periods

Mülheim an der Ruhr, October 10, 2007 – In the 140th year of its existence the Tengelmann Group rounded off its 2006/2007 financial year with sales totaling EUR 24.52 billion. This equates to a currency-adjusted 3.2 percent sales increase. “The business begun by my ancestors as a grocery business back in 1867 has over the years developed into an international retail enterprise,” commented Karl-Erivan W. Haub, Managing Partner and CEO Europe of the Tengelmann Group. “Nevertheless in the anniversary year of our family business we might have wished for a somewhat kinder trading situation overall.”

The Tengelmann Group is represented in 14 countries of Europe. In this region the OBI, KiK, Plus and Kaiser’s Tengelmann divisions jointly recorded sales of EUR 19.24 billion, representing an increase of 4.9 percent. Overall in Europe, the Group employed a workforce of 117,349 at 7,650 branches.

OBI - Well equipped for the future
In its hard-fought home market of Germany where concentration is the order of the day, OBI with its 336 German outlets effectively maintained its position as number one in the DIY stores sector. As a whole, the company has an active presence in ten countries with a total of 502 stores. Its 38,372 employees generated sales of EUR 5.78 billion, up by a record 9.4 percent on the year before. OBI profited from the hike in value added tax effective January 1, 2007, which led to a substantial rise in December sales as customers brought forward conversion and renovation projects. The unusually warm spring of 2007 also helped lift sales, though it must be said that these effects were to the detriment of the current financial year. The FIFA football World Cup™, of which OBI was a committed national sponsor, once again heightened public awareness of the company: According to a survey by market research institute Infratest, 98 percent of Germans are familiar with OBI. The company will be entering the market in the Ukraine in 2008, this will be the 11th country.

KiK – Successful in four countries
KiK has enjoyed success for 13 years now with its concept of “clothing for less than 30 euro”. With 2,277 branches the company remains the undisputed leader on price in the textiles discounting segment. Having entered the markets of the Czech Republic and Slovenia, along with Germany and Austria, KiK is now represented in four European countries. In the last financial year it employed a workforce of 17,318 and generated record sales of EUR 1.35 billion, up once again by around 15 percent on the year before. KiK also profited substantially from the warm weather in spring 2007. In the current financial year the company employs 1,651 trainees, up by 50 percent on the year before, with the intention of staffing its continued growth from among its own ranks.

Plus – Downturn in non-food business
The Plus discount chain continued to pursue its targets for expansion in Germany and elsewhere in Europe with 376 new store openings. However against the background of declining non-food business throughout the sector as a whole, the increase in sales of just 1.7 percent lagged well behind expectations. With a turnover of EUR 6.87 billion at 2,912 branches, Plus nevertheless maintained third place among the discounters in its home market. Following Plus‘ entry into the Greek market, the company’s trademark Small Prices are now represented in nine countries, with a Bulgarian market debut scheduled for 2008. After 14 years in Spain, Plus discontinued its activities in that country effective from the start of the current financial year. Last year in Europe as a whole the discount chain generated sales of EUR 9.57 billion, representing an increase of 2.7 percent. This development was achieved with a workforce of 42,305 employed at 4,168 branches.

Kaiser’s Tengelmann AG – Freshness is a winning formula
With a workforce of 17,256 employed at 703 branches, the supermarkets operated by Kaiser’s Tengelmann AG managed to approximately equal their previous year’s results, generating sales of EUR 2.51 billion. The rolling conversion of selected stores to the new “Black, Red & Gold” concept was continued with greater emphasis. Kaiser’s Tengelmann AG is consistently positioning itself as a provider of fresh, regional and organic products. The fact that the Kaiser’s branch in Clayallee in the Berlin suburb of Zehlendorf was selected by the trade journal Lebensmittel Praxis as its “Supermarket of the Year” illustrates how successful and future-oriented this concept really is.

A & P – Branch structure further concentrated
The US subsidiary of the Tengelmann Group, The Great Atlantic and Pacific Tea Company, Inc. (A & P) which operates 406 stores and employs 34,404 people in the USA, posted sales of EUR 5.29 billion. The 2.6 percent decline in sales is attributable to the disposal of A&P’s Canadian branches in the previous year. The 2006/2007 financial year was characterized by continuing regional concentration. As part of this process, in March 2007 contracts were signed to take over 140 Pathmark branches in New York/New Jersey, however the deal is still subject to anti-trust approval. In parallel with this move, A & P withdrew from the Mid West (Farmer Jack) and the New Orleans area (Save-A-Center).