Even with new store concepts, the department store chain has not yet been able to generate enough profit.
(Photo: GALERIA Karstadt Kaufhof GmbH)
Dusseldorf Galeria Karstadt Kaufhof wants to renovate itself. The ailing department store chain has agreed on a protective shield procedure with its major creditors, including the State Economic Stabilization Fund (WSF). This is understood to mean insolvency proceedings in which the management carries out the restructuring itself under the supervision of a trustee.
A company spokesman confirmed this Handelsblatt information from company circles on Monday evening. Wirtschaftswoche first reported on the protective shield procedure.
Frank Kebekus is to act as the trustee, and the restructuring specialist Arndt Geiwitz is to help with the restructuring. A recent application to the federal government for more than 250 million euros in additional state aid is therefore obsolete.
The retail giant is facing further branch closures. Galeria boss Miguel Müllenbach told the “Frankfurter Allgemeine Zeitung” that the branch network had to be “reduced by at least a third” as part of the protective shield procedure. Layoffs are unavoidable. With 17,000 employees, the group currently operates 131 department stores in 97 German cities.
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It is the second time in less than two years that the department store group that emerged from the merger of Karstadt and Kaufhof has had to go to insolvency court. Because already during the first corona lockdown in April 2020, the company had sought rescue in a protective shield procedure. The insolvency proceedings lasted until the end of September.
This involved severe cuts: the closure of around 40 branches, the reduction of around 4,000 jobs and the cancellation of more than two billion euros in debt should enable the company to restart. But the hope that the group would then be able to get off to a successful start, freed from many legacy issues, was not fulfilled.
Dramatic letter to the workforce
The company had already received state aid of 460 million euros during the pandemic. Now Galeria Karstadt Kaufhof has once again fallen into crisis due to a weak consumer climate, inflation and high energy prices.
With the recent termination of the collective agreement with the Verdi union, the company had admitted that it was once again in trouble. Because termination is only possible in an “existence-threatening economic emergency”.
Galeria Karstadt Kaufhof belongs to the Signa Holding of the Austrian real estate investor René Benko. Among other things, it has a real estate portfolio worth billions. The department store group emerged in 2019 from the merger of Karstadt and Kaufhof initiated by Benko.
Galeria boss Miguel Müllenbach painted a dramatic picture in a letter to the employees at the beginning of October. “We will only be able to continue on our path successfully if we succeed in restructuring Galeria’s financing and injecting new, fresh capital into the company,” the letter says.
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