The future of Germany’s last major department store group, Galeria Karstadt Kaufhof, is more open than ever. Earlier this week, the company filed for bankruptcy again, for the second time in two years, and is now hoping for self-administration with the help of a so-called protective shield procedure. According to the company, one of the plans is to give up at least a third of the 131 branches currently in Germany, which would mean 44 locations or more. There will also be layoffs, it said. Galeria currently has a good 17,000 employees.
Business has been bad for a long time, most recently due to high inflation and higher energy prices. That is why Galeria asked for state support again. The Austrian real estate entrepreneur René Benko owns the group through his Signa Holding. According to SZ information, however, he and the federal government had not previously been able to agree on the conditions for renewed state aid. From the government’s point of view, the group’s business model is not sustainable without major conversions. In addition, Benko was apparently not willing to close a significant part of the financial gap with his own resources. However, participation by the owner is a prerequisite for support.
Galeria was created in 2019 from the merger of the competitors Kaufhof and Karstadt operated by Benko and had already agreed on state aid with the federal government in 2021. In total, the Economic Stabilization Fund (WSF) has already made 680 million euros available to the traditional company in two aid campaigns. However, the stubborn refusal of further aid by the ministries involved and the insolvency now harbor the risk that the state will have to write off part of the aid it has previously granted. Among other things, he had granted the company a so-called subordinated loan of EUR 460 million, which entitles the creditor to very few claims in insolvency proceedings.
“Everything, really everything” should now be put to the test
“It is again our duty to put everything, really everything, to the test in the coming weeks,” said Galeria boss Miguel Müllenbach in a letter to employees, adding: “Galeria is fit for the future.” The group will continue to perform an essential function for German inner cities. There were already deep cuts in 2020. In the 2020/21 financial year, the loss was EUR 622 million with sales of EUR 2.1 billion, and the corona lockdown in particular hit Galeria hard. Benko’s Signa Group owns many department store properties, and the department store group Galeria pays rents to Signa.
“The anger and disappointment is great among our colleagues on site,” said Stefanie Nutzberger from the Verdi union. It is now a matter of “preserving as many jobs as possible”. The auditor Arndt Geiwitz was appointed as the reorganizer, and he also wound up the Schlecker drugstore chain as insolvency administrator.