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Mergers, bankruptcies, losses: The large department stores were once consumer magnets in the city centers, but Galeria, Karstadt and Kaufhof have long been in need of restructuring. How did that happen? A chronology.
Large department stores have existed in Germany since the 1880s. Department stores dominated city centers for decades and became the central points of contact for consumption during the “economic miracle” after the Second World War. In the 1980s, customers began to decline. Since the 2000s at the latest, the remaining chains Galeria Kaufhof and Karstadt have been in need of long-term restructuring. A chronology of decline.
1879 – the beginnings
Leonhard Tietz opens a textile shop in Stralsund – the nucleus of Kaufhof. Two years later, the entrepreneur Rudolph Karstadt started his “cloth manufacturing and confectionery business” in Wismar. Their concept: fixed prices instead of negotiations between customers and sellers.
1994 – four department store chains become two
As a result of two major mergers, only Kaufhof and Karstadt remain as large department store chains on the German market. Kaufhof AG swallows up its competitor Horten, and Karstadt AG takes over the Hertie Group.
The Horten department store in Frankfurt (Oder) in 1996.
1999 – KarstadtQuelle AG
Karstadt AG merges with the Quelle-Schickedanz mail order company to form KarstadtQuelle AG, a retail giant with more than 116,000 employees and 32.5 billion German marks in sales. With an enterprise value of 4.5 billion euros, the company is listed in the German leading index DAX.
A Quelle branch in Düsseldorf 1999.
2000 – KarstadtQuelle: Fusion dreams and Job cuts
After 18 years, the head of KarstadtQuelle, Walter Deuss, is resigning from his position. His successor Wolfgang Urban is cutting 7,000 jobs and is aiming for a merger with competitor Kaufhof. However, “Deutsche Warenhaus AG” does not come into being.
The chairman of the board, Wolfgang Urban, gives a speech at the general meeting of KarstadtQuelle in July 2002.
2005 – “It’s about survival”
The manager Thomas Middelhoff takes over the management of KarstadtQuelle. As soon as he took office, he explained that the “patient” KarstadtQuelle was “about survival”. Middelhoff is selling group-owned department store properties for a total of 4.5 billion euros. The real estate deal is celebrated as a liberation – but the high rents later become a burden.
Thomas Middelhoff had been head of the Karstadt Group Arcandor since May 2005.
2007 – the Arcandor Group is founded
KarstadtQuelle gets a new name: the artificial term “Arcandor” now adorns the company headquarters. At the same time, with the takeover of the British tour operator “mytravel”, the travel subsidiary Thomas Cook grew into what was then the third largest travel provider in the world. Nevertheless, Karstadt’s department stores are dragging the Arcandor Group deep into the loss zone. For the 2007/2008 financial year, the net loss was 745.7 million euros.
Craftsmen assemble the new company name at the Karstadt headquarters.
2009 – Karstadt: the first bankruptcy
In the middle of the financial crisis, Arcandor has to file for bankruptcy for its subsidiaries Quelle and Karstadt. It is the biggest bankruptcy in German economic history. The federal and state governments are stepping in with a guarantee of 50 million euros to support ongoing business. Nevertheless, the insolvency administration announced the closure of ten branches and the dismissal of 1,200 employees.
A retail worker demonstrates in downtown Munich on June 10, 2009 to save jobs at Karstadt.
2010 to 2014 – a US investor wins the contract
In April 2010, the creditors’ committee awarded the American investor Nicolas Berggruen the bid to purchase the remaining Karstadt department stores. Over 2,000 of the remaining 25,000 jobs will soon be cut under the Berggruen Holding. Nevertheless, Karstadt continues to make a high loss – in 2012/2013 it was 131 million euros.
Nicolas Berggruen speaks to media representatives in front of the Karstadt headquarters in Essen on June 7th, 2010. The US investor received a lot of early praise for the takeover.
2014 – René Benko takes over at Karstadt
After just four years, investor Nicolas Berggruen is retiring. His successor René Benko buys the Karstadt department stores in need of renovation for a symbolic euro. Benko sees an opportunity for Karstadt in the merger with Galeria Kaufhof. The idea of a “Deutsche Warenhaus AG” is being discussed again.
The Austrian billionaire René Benko (archive photo) took over the department store group from US investor Nicolas Berggruen in 2014.
2015 – Metro separates from Galeria Kaufhof
With the takeover of Galeria Kaufhof by the US retail giant HBC, Benko’s plans for a “Deutsche Warenhaus AG” collapse. The former owner Metro sees HBC as the bidder with the better renovation concept.
Olaf Koch, left, CEO of Metro Group, and Richard A. Baker, Governor and Executive Chairman of HBC.
2018 – Karstadt and Kaufhof: “Merger of equals”
After long negotiations, HBC and Benkos Signa-Holding announce a “merger of equals”. In the merger, Signa receives a narrow majority of 51.01 percent. The German department stores will now be called “Galeria Karstadt Kaufhof”.
In November 2018, the merger of Karstadt and Kaufhof was officially confirmed by the Federal Cartel Office. As a result of the merger, the newly created retail giant had 243 locations across Europe and employed around 32,000 people.
April 2020 – Galeria-Karstadt-Kaufhof: the second bankruptcy
Even before the corona pandemic, Galeria-Karstadt-Kaufhof was making high losses, but during the lockdown Galeria is losing more than 80 million euros per week. After just one month of the pandemic, the group is insolvent and is heading into protective shield insolvency proceedings.
“We are closing this branch” and “Everything is reduced” are written on the entrance doors of a branch of Galeria Karstadt Kaufhof (archive).
September 2020 to 2022 – Debt cut, State aid and new name
In September 2020, the insolvency administrator announced a haircut, but the company still needs money from the state. In January 2021, the federal economic stabilization fund approved a loan of 460 million euros. A year later, a silent contribution of 220 million euros was added, bringing the state aid to 680 million euros. From now on, all department stores will be called “Galeria”.
The closed Galeria Karstadt Kaufhof branch on Bahnhofplatz in Munich (archive).
October 2022 – back to the protective shield –Insolvency proceedings
For the second time in two years, the group has to apply for rescue through protective shield insolvency proceedings. According to the insolvency administrator, only the profitable branches should remain open.
May 2023 – a third of the remaining branches are to close
With the end of the insolvency proceedings, 41 of the 129 branches are expected to close. Galeria’s creditors are reportedly waiving loans amounting to 1.3 billion euros – the majority of Galeria’s debts. The first 19 branches will be closed in June 2023, and the remaining 21 will follow at the end of January 2024. At the same time, there are signs of problems with Benko’s real estate empire.
December 2023 – Signa Holding is bankrupt
Little by little, René Benko’s empire is slipping into insolvency – first the holding company and later other central Signa companies. Although the remaining branches recently generated an operating profit of 70 million euros, the Galeria Group remains in the red.
January 9, 2024 – Galeria files for bankruptcy again
For the third time in just a few years, the Galeria chain is filing for bankruptcy. In doing so, the company wants to free itself “from the framework conditions set by Signa,” it says in a statement. The aim is for a change of ownership that will enable the department store chain to continue.