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Mercator, Slovenia's largest food retailer, saw group profits fall through the first quarter of 2012 as the country was hit by slow economic growth and rising unemployment.

The group reported that profit fell to €0.7m from last year's €10.2m, despite sales climbing 3.6 per cent to €676m.

'A significant economic slowdown, increase in joblessrates and lower real disposable income have resulted in reducedspending,' the group said in a statement.