Galeria Karstadt Kaufhof Files for Bankruptcy for the Third Time, Thousands of Employees Facing Uncertain Future

The department store group Galeria Karstadt Kaufhof files for bankruptcy for the third time. Thousands of employees are facing a new tremor.09.01.2024 | 1:58 minutes

The department store chain Galeria Karstadt Kaufhof (GKK) has filed for bankruptcy. According to the company, Galeria is now looking for a new owner. Discussions with potential investors have already begun and the aim is to continue Galeria.

Galeria boss Olivier van den Bossche said: “Galeria’s operational success is burdened by the framework conditions of the old ownership structure.”

We explicitly see today as a liberation.

Olivier van den Bossche, Galeria Chef

The statement continues: “The Signa Group’s bankruptcies are causing massive damage to Galeria, hindering ongoing business and severely restricting future development opportunities through high rents and expensive services.”

What follows from the new bankruptcy filing by the Galeria Karstadt Kaufhof department store chain? An assessment by ZDF stock market expert Frank Bethmann.09.01.2024 | 1:04 minutes

How is Galeria Karstadt Kaufhof doing?

In April 2020, Galeria Karstadt Kaufhof filed for bankruptcy under its own responsibility for the first time. The company had around two billion euros in debt forgiven. 41 branches had to close and around 4,000 jobs were cut.

The future of employees is more uncertain and uncertain than ever, according to ZDF stock market expert Frank Bethmann. The protective shield procedure has now become a regular procedure.09.01.2024 | 1:30 minutes

Why did the company file for bankruptcy now?

Since 2018, the company has been completely part of the extensive Signa empire of the Tyrolean investor René Benko. After its holding company and important real estate companies filed for bankruptcy in November, Galeria also fell into a downward spiral.

As a result of Signa’s insolvency, banks will have to forego “significant parts of their loans,” according to economist Gerrit Heinemann. November 29, 2023 | 4:49 minutes

Signa had previously promised the department store group 200 million euros for restructuring. However, the money – a prerequisite for further state aid – never flowed, and the department store group’s future chances dwindled accordingly.

Things have been going well for Galeria Karstadt Kaufhof recently; the chain, which has been in crisis for years, even made an operating profit for the current financial year. Christmas business also went surprisingly well.

Also as a result of the overwhelming competition from online retail, Galeria department store has to close locations.03/14/2023 | 2:26 minutes

What does the third bankruptcy mean?

With the bankruptcy, the Galeria management is trying to decouple itself from the Signa chaos and save a core of the department store group. The procedure could also be a liberation: for example, it opens up the possibility of getting out of old, existing contracts.

Because René Benko had, among other things, forced very high rents on the department store group; in Cologne alone the rental costs account for 35 percent, while ten to 15 percent are normal. As part of the insolvency proceedings, Galeria now wants to renegotiate the rental agreements. But retail experts have doubts about whether cheaper rents can save the department store group.

Galeria is closing 52 of its remaining 129 department stores. Horrifying news for thousands of employees and for affected inner cities.03/13/2023 | 4:53 minutes

What are the chances for a new gallery?

Not good. Although 60 of the 92 existing branches are profitable and could form the core of a new Galeria group, this would require an investor to inject fresh money. But that is not in sight – Breuninger and others have already declined.

The state is also likely to be the savior this time. Of the total 680 million euros in state aid paid out, 600 million euros have been lost and additional amounts can hardly be justified given the current budget situation.

The Signa Holding of the Austrian real estate and trading entrepreneur Benko has filed for bankruptcy. The group also includes the department store group Galeria Karstadt Kaufhof. November 29, 2023 | 2:23 minutes

Do department stores still have a future?

Individual branches do. The Thai trading company Central Group already has a stake in various luxury department stores, including Berlin’s KaDeWe, the Alsterhaus in Hamburg and the Oberpollinger in Munich. They serve the luxury market, which is growing even in times of crisis. It is possible that the company will also take over other profitable branches.

In smaller cities, however, retail expert Gerrit Heinemann sees no chance of survival for Galeria. He thinks it is conceivable that only individual “pieces of cream” remain.

2024-01-09 20:19:36
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