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Last Updated: Wednesday, 19 October 2005, 11:04 GMT 12:04 UK
Bleak time for German retailers
A retail promotion in a Karstadt store
Despite promotions German retailers are finding it tough
German retailers had a lean month in September because of political uncertainty and high energy prices, a leading industry body has said.

According to the HDE retail group, the industry suffered its sharpest collapse in sales last month "in a long time".

Consumer confidence was weakened by Germany's inconclusive general election result and rising fuel costs, it added.

Shares in leading German retailers such as Metro and KarstadtQuelle fell on the news of the disappointing performance.

Double whammy

German retailers have been under pressure for some time, with the rise in unemployment to a post-World War II record and minimal levels of economic growth depressing consumer spending.

September was an extremely bleak month
Hermann Franzen, HDE retailers' association

Their problems were exacerbated by the rise in world oil prices to a record $70.85 in the aftermath of Hurricane Katrina which, in turn, pushed up petrol and fuel costs.

September's inconclusive poll, which led to weeks of uncertainty before a governing coalition took shape, also hindered retailers' efforts to encourage more people into their stores.

"According to the information available to us, September was an extremely bleak month which gave us the biggest collapse in sales in a long time," HDE president Hermann Franzen said.

Tax worries

Despite September's woes, HDE is not changing its forecast of a 1% overall decline in retail sales for the whole of 2005.

HDE urged Germany's new government headed by Angela Merkel not to raise taxes in an effort to cut the country's budget deficit.

German's leading retailers are due to publish their September sales figures early next month.

In Tuesday trading, shares in Metro fell 2.4% to 39.30 euros, while KarstadtQuelle fell 4% to 10.36 euros.

Consumer products group Henkel was also affected, its shares dropping 1.5% to 66.49 euros.

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