Galeria Karstadt Kaufhof will close 16 of its 92 branches on August 31 this year. This was announced by insolvency administrator Stefan Denkhaus on Saturday. Of the approximately 12,800 people employed by the financially troubled company, 11,400 should keep their jobs. 1,400 will have to go, almost a third of whom are employees at the company headquarters in Essen.
The company’s headquarters are to move to the Düsseldorf Shadowstrasse branch. “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.
According to the retail group, a reconciliation of interests and a social plan were agreed with the general works council. Among other things, it was stipulated that all those affected could move 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 the general works council chairman Jürgen Ettl. Nevertheless, the entire workforce is greatly affected.
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 removed from 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.
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.
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, Galeria boss Olivier 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. Their imbalance had an immediate impact: financial resources for the restructuring of the department store chain, which had been promised in the wake of Benko’s previous insolvency, were no longer flowing.
In January, van den Bossche and Denkhaus announced the search for a new owner and the preservation of Galeria as their goals. 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. It is still unclear what concept will be used to bring the trading group forward again and to what extent the new owners will invest in the business. However, the agreement concluded between investors and Galeria will only come into effect if the creditors agree.
Beetz emphasized that the agreement offers a better and more sustainable economic basis for the future of the department store. “We remain committed to our offer to make Galeria a highly attractive retailer again and look forward to the next steps in the process.”
What’s next? 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.
