Status: 10/31/2022 6:29 p.m
More branches will probably have to be closed: Galeria Karstadt Kaufhof is again seeking rescue in a protective shield procedure – for the second time in less than two years.
The last major German department store group in Germany, Galeria Karstadt Kaufhof, is again seeking rescue in protective shield proceedings. This was announced by a company spokesman in Essen.
The group is likely to face further branch closures – according to Galeria boss Miguel Müllenbach, the branch network must be reduced by at least a third. Operational redundancies are therefore unavoidable, he told the “Frankfurter Allgemeine Zeitung”. The department store giant currently operates 131 stores in 97 German cities with 17,000 employees.
Already second bankruptcy
It is the second time in less than two years that the department store group created by the merger of Karstadt and Kaufhof has had to file for bankruptcy. During the first corona lockdown in April 2020, the company had already sought rescue in protective shield proceedings. The insolvency proceedings lasted until the end of September. This involved severe cuts: around 40 branches were closed, around 4,000 jobs were cut and more than two billion euros in debt were canceled. That should give the company a fresh start.
However, the hope that the group would then be able to get off to a successful start freed from many legacy issues was not fulfilled. On the contrary: in early 2021 and early 2022, the shrunken retail giant had to ask for government support in view of the pandemic. Overall, the economic stabilization fund helped the group with a total of 680 million euros.
Ukraine war and energy crisis burden
Now Galeria was again in trouble as a result of the consequences of the Ukraine war and inflation: CEO Müllenbach warned a few weeks ago that Galeria was “in a dangerous situation” due to skyrocketing energy prices and sluggish consumption. The group needs fresh money to continue.
However, whether the department store chain will receive state aid again is controversial: Critics consider the business model to be outdated, complain about a distortion of competition associated with the aid or see the Galeria owner, the Austrian real estate billionaire René Benko, as responsible.
Proponents of state aid pointed to the great importance of department stores for the attractiveness of many inner cities.