Wal-Mart, the world’s biggest retailer, announced today that it decided to close its operations in Germany, by selling its 85 stores to a local rival, Düsseldorf-based Metro AG.

After operating in the German market for 9 years, the local forecast was for it to make a pre-tax loss of approximately $1 billion in the second quarter for 2007. Michael Duke, vice chairman of Wal-Mart, said it was clear that the local business environment was difficult for its German operation to achieve their goal.

“It has become increasingly clear that in Germany's business environment it would be difficult for us to obtain the scale and results we desire,” said Duke.

The German Wal-Mart operation generated €2 billion ($2.55 billion) in sales with 11,000 employees, and represented 4 percent of the firm’s overall international operation. This withdrawal came after two months, when the Arkansas-based firm pulled its operation from South Korea due to intense competition.

The intense competition in Germany had humbled Wal-Mart. The company's leadership had previously said that its local rival had the knowledge to compete in the market.

We have to take off our hats to Körber and Metro, said Wal-Mart's CEO Leo Scott at a retail conference in 2004, according to Reuters. They know how to make money in Germany.

“The shops are the ideal supplement to our current network of the Real Hypermarket brand,” Metro said in a statement, in relation to the benefit of the acquisition of the stores.