1400 jobs affected

Galeria confirms: 16 stores to close at the end of August

The financially troubled department store group Galeria Karstadt Kaufhof, which slipped into several insolvencies under its previous owner, the financial juggler Rene Benko, will close 16 of its 92 stores on August 31 of this year. This was announced by insolvency administrator Stefan Denkhaus on Saturday.

Berlin (Ringcenter, Spandau, Tempelhof), North Rhine-Westphalia (Essen, Cologne Breite Straße, Wesel) and Bavaria (Augsburg, Regensburg Neupfarrplatz, Würzburg) are particularly affected by the closures with three stores each.

These department stores are also to close: Chemnitz, Leonberg, Mainz, Mannheim, Oldenburg, Potsdam, Trier Fleischstraße.

1400 jobs affected
Of the approximately 12,800 people employed by the company, 11,400 are to keep their jobs. 1400 will have to leave, almost a third of which are employees at the Group 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 believe we are well placed to do so, not least thanks to our sales performance in the current financial year," said Galeria CEO Olivier Van den Bossche.

According to the retail group, a reconciliation of interests and a social plan have been agreed with the general works council. Among other things, it was agreed that all those affected could move to a transfer company for eight months in order to find their feet on the job market. "A few weeks ago, the fear of the Galeria liquidation scenario was still great. But now there is another chance for the department store," said Jürgen Ettl, Chairman of the General Works Council. Nevertheless, the entire workforce is deeply affected.

"We negotiated hard to keep every store"
When deciding on the future of the stores, insolvency administrator Denkhaus focused on the level of rent in addition to turnover and the purchasing power of the respective region. "We negotiated hard to preserve each individual store," said Denkhaus. Individual stores on the closure list may still have hope of survival. In the previous insolvency proceedings, which were lifted in May 2023, some department stores were taken off the list again. Because new agreements were reached with tenants at short notice, in the end only 37 of the former 129 locations were closed rather than 52.

The German Association of Cities sees the preservation of 76 stores as good news for the local authorities and the employees of the stores. "We have the impression that this new start outside the Signa Group really marks the beginning of a period of sustainable concepts for the locations," Managing Director Helmut Dedy told dpa. Nevertheless, it was "bitter news" for the locations that could not be saved.

Signa insolvency to blame for difficult situation
Expert Johannes Berentzen from the retail consultancy firm BBE was skeptical. The closure of the 16 stores did not solve the major challenges facing the remaining stores and the Galeria business model, he told dpa. It is about more entrepreneurship on site, investments in the area, in personnel and in linking the online and offline worlds.

The department store group filed for insolvency at the beginning of January. It is the third insolvency in three and a half years. At the time, Galeria CEO Olivier Van den Bossche cited the insolvencies of the Signa Group, previously owned by René Benko, as one of the reasons for the difficult situation. Their imbalance had an immediate impact: Funding for the restructuring of the department store chain, which had been promised in the course of Benko's previous insolvency, no longer flowed.

US investors take over department store chain
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 consisting of the US investment company NRDC and the company BB Kapital SA owned by entrepreneur Bernd Beetz wants to take over the department store chain.

It is still unclear what concept will be used to turn the retail group around 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.

Positive outlook for Galeria's future
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 turn Galeria back into a highly attractive retailer and look forward to the next steps in the proceedings."

Insolvency administrator Denkhaus intends to present the insolvency plan for the change of ownership by the end of April. The plan will only be legally binding if the creditors' meeting approves it on May 28 and it is subsequently confirmed by the court. Denkhaus intends to hand over the company to the new owners by the end of July.