Douglas says Christmas sales fell short of its hopes

DUESSELDORF - German retailer Douglas said Christmas sales fell short of its expectations as it posted a 31 percent drop in annual operating profit, hit by weakness at its books division.

It has been a fiercely competitive holiday season in austerity-hit Europe, with retailers fighting over shoppers' dwindling budgets with discounts and offers.

Douglas, which had already reported sales up 1.7 percent to 3.44 billion euros ($4.6 billion) for the 12 months to end-September, said on Tuesday revenue in its fiscal first quarter, which includes Christmas, rose 1.6 percent.

Chief Executive Henning Kreke said the figure "was slightly below our expectations."

The company, publishing its last set of annual results as a listed company following a takeover by its founding family and private equity, said earnings before interest, tax, depreciation and amortisation came to 201.2 million euros for the year to September, in line with its forecast.

At the Thalia chain of bookstores, which Douglas has been restructuring after it was caught out by competition from online rivals like Amazon.com, the firm booked restructuring costs and writedowns of 155 million euros for the fiscal year, dragging the group down to a net loss of 109.9 million euros.

It would not be paying a dividend for the year, it added.

Jewellery was a bright spot, Douglas said, with sales in the fiscal year at its Christ chain of stores up 9.6 percent.

Demand for diamond rings and gold watches is being fuelled by an uncertain economic outlook, which is making shoppers in Europe's largest economy seek out gifts more likely to retain - and possibly increase - their value, experts have said.