Metro runs more than 2,200 outlets in 32 countries.

German retailer Metro predicted operating earnings would fall in the coming months, hit by weak consumer spending, a lack of major sporting events and investments aimed at reviving its main cash and carry business.

Shares in the company, which also runs consumer electronics stores, hypermarkets and department stores, dropped as much as three per cent yesterday, at times the biggest decline by a European blue-chip stock.

Store groups across Europe are battling to cope with a prolonged squeeze on consumer incomes as governments try to reduce their deficits. France’s Carrefour, for example, is handing more power to store managers, while Britain’s Tesco is cutting prices and upgrading stores.

Metro’s cash-and-carry business, which accounts for almost half of sales and 40 per cent of earnings, has been hit particularly hard by the impact of economic weakness on its core customers in the independent retail and hospitality industries.

Earlier this week, chief executive Olaf Koch took over the running of the division, which accounts for almost half of sales and 40 per cent of earnings, a move analysts said showed how much pressure there was to improve its performance.

Metro, which runs more than 2,200 outlets in 32 countries but gets just over two-thirds of sales from Germany and other western European countries, has been cutting prices at its cash and carries, as well as revamping product ranges and investing in its delivery arm in a bid to reverse a decline in earnings.

Koch said the cost of the revamp would continue to depress earnings at the unit in the first nine months of 2013 – a shortened fiscal year as the group changes its reporting period.

“We are not happy with the development of earnings, but are convinced we can get back to our old earnings power,” he told journalists. Cash-and-carry earnings dropped 15 percent in 2012.

The group identified Eastern European and Asian countries like Turkey, Russia and China as places where it will seek to open new cash and carry stores, due to stronger economies there.

It also said its consumer electronics business Media Markt Saturn would be held back by a lack of major sporting events compared with 2012, when the Olympic Games and European soccer finals boosted sales of televisions.

“Overall, the guidance would imply that the earnings scenario looks poorer than expected,” Commerzbank analysts wrote in a research note.

In an unscheduled statement earlier this month, Metro reported operating profit dropped 16 per cent to €1.98 billion last year and cut its dividend for the first time in over 14 years.