Strangely enough, the atmosphere in Essen at Galeria’s huge headquarters is pretty good, employees tell us. This is strange because the threat of job cuts at the insolvent department store chain seems to be becoming more and more concrete. According to information from South German newspaper From the circles involved, there are still four serious takeover prospects in the bidding race for Galeria Karstadt Kaufhof, the retail chain that only makes around 2.5 billion euros in sales per year. In 2019 it was around 4.5 billion euros.
The potential investors are currently being driven from branch to branch by Galeria managers and are even supposed to spread a certain optimism. This is also part of the bidding process, which ends next week.
However, according to information from the SZ, all interested parties only want to take over around 60 of the currently 92 branches. There is a risk of severe job cuts. That would be a further blow for the department store chain, which has slipped in the wake of the crisis at the parent company Signa and its most important figure René Benko. “60+”, that is the number that Galeria boss Olivier van den Bossche himself mentioned publicly several times after the retail chain filed for bankruptcy for the third time in just over three years at the beginning of January. However, the Belgian meant that a good 60 branches were profitable.
But why should investors take over unprofitable business units? Some department stores are bundled into packages that include profitable and unprofitable locations. Previously they were only available as a package. But now, it is said, these “master lease” contracts are being broken up.
This means that 20 to 30 branches are available. Which would mean that an impressive four-digit number of jobs would be lost in these houses alone. There would also be positions in higher-level units. It is an open secret that Galeria will not remain in the oversized, approximately 100,000 square meter company headquarters in Essen. The building belongs to the Signa Group. Galeria pays around four million euros in rent per year. A large number of jobs could also be lost in Essen.
“We have to be very careful that something similar doesn’t happen at Galeria Karstadt Kaufhof.”
In total, the company currently employs around 15,500 people, which corresponds to 12,000 full-time positions. The provisional insolvency administrator Stefan Denkhaus said through a spokesman that the bidding process is currently “on the home stretch” and that binding offers are “requested” by March 22nd. At the current stage, no information can be given about the status of the proceedings.
However, the SZ learned from several sources that out of six serious interested buyers, only four remain. Three of them are known so far: The US perfume and cosmetics company Coty; Bernd Beetz, the former chairman of the Kaufhof supervisory board, is negotiating on his behalf. The investment arm of the French department store group Galeries Lafayette, which is, however, said to have little serious interest. And the Düsseldorf-based financial investor Droege Group, which denied takeover ambitions at the beginning of the year but is now considered the favorite. The company left an SZ query about this unanswered. A spokeswoman said only in general terms: “We generally do not comment on market rumors and speculation.”
According to information from creditor circles, Droege only expressed interest in the 20 most successful Galeria branches during the negotiations. Conversely, this would mean that around 70 trading companies would be closed, with corresponding job losses. They say that they have now moved away from this. “No matter who ends up taking over how much of the Galeria, they need a minimum size and a minimum number of branches in order to be able to act confidently towards suppliers and negotiate reasonable purchasing prices,” says a person involved in the process. That’s why Droege is now reportedly interested in a larger number of branches.
The Düsseldorf investor is viewed critically, especially in employee circles. There is a reference there to worldview. In the summer of 2014, Droege was awarded the contract for the then struggling publishing chain. As soon as Droege owned it, more jobs were lost. “We have to be very careful that something similar doesn’t happen at Galeria Karstadt Kaufhof,” said an employee representative, “regardless of whether it’s with Droege or another investor.” However, the influence of works councils and trade unionists is limited. “In the end, the creditors and the insolvency administrator decide in insolvency proceedings.”
It is said that work is already being done on a reconciliation of interests and a social plan. The regular insolvency proceedings usually begin three months after filing for insolvency. The investor should also be determined by the beginning of April. A high-profile warning about job losses was already in the works. In fact, according to an insider, Galeria is essentially interesting for investors because a lot of costs can be saved there. However, this does not mean the employees, but rather the high costs of the rent.