Insolvent department store chain
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Galeria Karstadt Kaufhof is closing branches in Berlin-Lichtenberg, Spandau, Tempelhof and Potsdam
The department store chain Galeria Karstadt Kaufhof is once again closing numerous stores at the end of August. Four houses are affected in Berlin and Brandenburg. Whether the creditors agree to this plan will only become clear in a few weeks.
- Insolvency administrator wants to close 16 houses, 1,400 employees will probably lose their jobs
- Houses in Lichtenberg, Tempelhof, Spandau and Potsdam are on the closure list
- Senator for Economic Affairs Giffey speaks of 182 people affected in Berlin
- In some cases there is still hope that individual branches will be saved
- Potsdam OBM wants to avoid the Karstadt building becoming vacant
- The creditors’ meeting still has to approve the plan at the end of May
The financially troubled department store group Galeria Karstadt Kaufhof is closing 16 of its 92 branches on August 31 this year. This was announced by insolvency administrator Stefan Denkhaus on Saturday.
In Berlin, the houses at the Ringcenter on Frankfurter Allee, in Spandau and in Tempelhof are affected. The department store in Potsdam is also to be closed. The Tempelhof location will be closed on Saturday due to a staff meeting.
In addition, houses in Essen, Cologne, Augsburg, Regensburg, Neupfarrplatz, Würzburg, Chemnitz, Leonberg, Mainz, Mannheim, Oldenburg and Trier are to close.
1,400 jobs are to be cut
Of the approximately 12,800 people the company employs, 11,400 should keep their jobs. 1,400 will have to go. “We will do everything we can to lead our business into a successful future. We see good conditions for this, not least due to our sales development in the current financial year,” said Galeria boss Olivier Van den Bossche.
The company’s headquarters are to move from Essen to the Düsseldorf Shadowstrasse branch.
Reconciliation of interests and social plan agreed
According to the trading group, a reconciliation of interests and a social plan were agreed with the general works council. Among other things, it was stipulated that everyone affected could switch to a transfer company for eight months in order to orient themselves on the job market.
“A few weeks ago there was still great fear of the scenario of Galeria being liquidated. But now there is another chance for the department store,” said General Works Council Chairman Jürgen Ettl. Nevertheless, the entire workforce is deeply affected.
Giffey: Future prospects for six houses
Berlin’s Senator for Economic Affairs Franziska Giffey (SPD) was relieved that there was now “a future perspective” for six of the nine houses. “After Galeria Karstadt Kaufhof’s third insolvency proceedings, this is a positive sign,” said Giffey. Nevertheless, the decision to close three department store locations was “bitter, especially for the 182 employees affected,” Giffey continued.
“The new investors see the necessary substance and profitability in the five locations Alexanderplatz, Schloßstrasse, Tegel, Kurfürstendamm and Hermannplatz.” In addition, there is the former GKK department store on Müllerstrasse, which is currently being renovated and will reopen in a new form, said Giffey. “It will now be the investors’ job to use good concepts to increase the attractiveness of these houses and to attract and retain customers in the long term.” The Senate will continue to monitor this. The interest continues to be “that these department stores, with their anchor function in our shopping streets and city centers, function well”; this is an “overarching concern,” it said.
According to Giffey, the affected employees can find out about placement options on a specially set up online platform. She emphasized that there are “several thousand unfilled positions.”
Potsdam’s mayor wants to avoid the building becoming vacant
In Potsdam, the reason for the decision to close was that there had been no agreement with the landlord about further rent reductions, the city said.
Mayor Mike Schubert (SPD) said that the sword of Damocles of closure was hovering over the department store once again. They now want to discuss the newly created situation together with the city center traders, the trade association and the Chamber of Commerce and Industry next week.
“The goal for the state capital Potsdam remains to have an anchor use for retail on Brandenburger Strasse at this traditional location. What is particularly important in this situation is to find good solutions for our colleagues in addition to the fight for the location who currently work at Karstadt,” says Schubert. “There should not be a vacancy in the largest house on Brandenburger Strasse.”
Insolvency administrator: “Negotiated hard to maintain every single branch”
When deciding on the future of the branches, the deciding factor for insolvency administrator Denkhaus was, in addition to the sales and purchasing power of the respective region, the level of rent. “We negotiated hard to keep every single branch,” said Denkhaus.
Individual branches on the closure list may still be able to hope for survival. In the previous insolvency proceedings, which were lifted in May 2023, some department stores were taken off the list again. Because there were new agreements with the tenants at short notice, in the end not 52 of the former 129 locations were closed, but only 37.
Praise and skepticism
The German Association of Cities sees the retention of 76 branches as good news for the municipalities and the employees of the stores. “We have the impression that with this new start outside the Signa Group, a time of sustainable concepts for the locations is really beginning,” said Managing Director Helmut Dedy to the dpa. Nevertheless, it is “bitter news” for the locations that cannot be saved.
Expert Johannes Berentzen from the trading consulting firm BBE was skeptical. With the closure of the 16 houses, the major challenges of the remaining houses and the Galeria business model have not been solved, he told the dpa. It’s about more local entrepreneurship, investments in space, in personnel and in linking the online and offline worlds.
Creditors’ meeting on May 28th
The department store group filed for bankruptcy at the beginning of January. It is the third bankruptcy within three and a half years. At the time, Van den Bossche cited, among other things, the insolvencies of the Signa Group of the previous owner René Benko as the reason for the difficult situation.
It has been known since the beginning of April that a consortium made up of the US investment company NRDC and entrepreneur Bernd Beetz’s company BB Kapital SA wants to take over the department store chain.
However, the agreement concluded between investors and Galeria will only come into effect if the creditors agree. Insolvency administrator Denkhaus wants to present the insolvency plan for the change of ownership by the end of April. The plan will not be legally binding until the creditors’ meeting approves it on May 28 and it is then reconfirmed by the court. Denkhaus wants to hand over the company to the new owners by the end of July.
Broadcast: rbb 88.8, April 27, 2024, 11:00 a.m