Metro accelerates fashion stores disposal

FRANKFURT (Reuters) - Germany's biggest retailer, Metro (MEOG.DE), will speed up the disposal of its Alder fashion stores and expenses for this will hit first-half results, the company said on Friday.

Metro said the Alder unit is now worth less than previously thought and that special items connected the disposal would amount to 375 million euros ($588.8 million).

"Against the backdrop of a weak first-half development in a very difficult overall clothing market environment, Metro Group has decided to accelerate the disposal of the Adler fashion stores," the company said in a statement.

Metro said its 2008 earnings target remains unchanged with growth of 6 to 8 percent before special items. It said the Adler expenses will not affect the company's proposed dividend.

Metro's shares were trading 1.2 percent down at 1402 GMT, lower than the German mid-cap index .MDAXI which was 0.2 percent lower.

The outlook is glum for German retailers, with consumers reluctant to spend in times of higher food and energy prices. Germany's HDE retail industry association said this month it expected sales to contract by around 1 percent in real terms this year.

Metro is due to release results on July 31. It is expected to report an 8.6 percent increase in second-quarter operating profit to 329 million euros, according to a Reuters poll conducted before the Metro statement on Friday.

(Reporting by Sylvia Westall; Editing by Quentin Bryar)