“It doesn’t look like a liberation strike”

Galeria Karstadt Kaufhof wants to close 16 of the 92 stores. One expert doubts whether that is enough.

Will the planned closures be enough to save the Galeria Karstadt Kaufhof department store chain? Expert Johannes Berentzen from the trading consulting firm BBE is 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 German Press Agency on Friday.

On Friday, the dpa learned from corporate circles that 16 of the 92 branches were to be closed. The insolvency administrator confirmed this on Saturday and presented a list of the affected branches. You can find out what these are here.

Berentzen went on to say that it was about more local entrepreneurship, investments in space, in personnel and in linking the online and offline worlds. In addition, structures and processes in the central functions must be adapted. “I am very skeptical that there will be enough time and money for this mammoth task,” said the BBE managing director.

Trade expert Carsten Kortum also doesn't see a “liberation strike” yet. The new owners around investor Bernd Beetz obviously did not come to compensate for losses on individual properties. All branches would have to be profitable in the short term. “Here, due to this short-term profitability thinking, medium-term potential could remain unused,” said the professor at the Baden-Württemberg Cooperative State University in Heilbronn on Saturday to the German Press Agency.

There is an investment backlog at Galeria, as financial resources have previously been withdrawn due to excessive rents. The Signa Group, as the previous owner, also promised investment funds and did not deliver them. This scenario could now repeat itself, Kortum warned. The new owners tried to continue operating the existing business model with minimal financial investment with small changes – but with significantly reduced costs due to the bankruptcy. “It doesn't look like a liberation move, more like a continuation of previous concepts. Customers will see little change in trading services in the short and medium term,” said the expert.

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.

However, the agreement concluded between investors and Galeria will only come into effect if the creditors agree. 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.