The company did not go through with the restructuring consistently and radically enough last time.
(Photo: Reuters)
As with the last insolvency proceedings of Galeria Karstadt Kaufhof less than two years ago, the big haggling will start again this time. The ritual is well known: The renovator Arndt Geiwitz, together with the administrator Frank Kebekus and the management, makes a cross-off list with a lot of locations that are up for grabs.
And then the landlords of the real estate, those responsible in the municipalities and employee representatives can try to negotiate individual houses off the list with the greatest possible concessions. And every branch that is not closed after all is celebrated as a success.
But this strategy must not be repeated. Because she was partly responsible for the fact that Galeria is now fleeing the protective shield procedure again.
Galeria has not consistently implemented the restructuring
External factors such as price increases, consumers’ reluctance to buy and skyrocketing energy costs have also contributed to the fact that the department store operator is in a situation that threatens its very existence. But that affects all other retailers too – and there is no nationwide wave of bankruptcies in retail. Most companies have enough substance to get through these difficult times.
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The decisive factor was that Galeria did not carry out the restructuring consistently and radically enough last time. The development was calculated and placed on the principle of hope for too long. But it was clear from the start that there would not be enough money to modernize 131 branches. The budget for the reorganization of e-commerce was also far too tight.
>> Read also: Which branches of the Galeria renovation could fall victim – and which not
The company would only have had a chance if the branch network had been further reduced and focused on the best locations. Then the investments could have been concentrated on fewer houses. And less ballast would have been carried along in department stores that didn’t generate enough revenue to support the entire network. It’s paying off now.
The company has lost valuable time. It is unclear whether the rescue can still succeed on this basis. For too long, management and employees have lived in the arrogant hope that things will always go on somehow and when in doubt someone will help – usually with a lot of money.
The time is up now. Now only radical steps without false considerations help. And a clear commitment from the owner Signa: The company owned by the investor René Benko must be willing to invest more money and also agree that branches will be closed where it is the owner itself. Otherwise, Galeria’s future is already behind it.
More: Fears about Galeria Karstadt Kaufhof – the most important questions about the protective shield insolvency