How could several famous German luxury department stores make such high losses? Apparently the mountain of debt has continued to grow in recent years.
The insolvent KaDeWe group, which includes the Berlin “Kaufhaus des Westens”, the Alsterhaus in Hamburg and the Oberpollinger in Munich, is said to have accumulated losses for years. This is reported by “Spiegel”. Accordingly, the department stores that belong to the Signa Group of the Austrian René Benko are said to have recorded a loss of 8.5 million euros in 2015. In the following years, the debts are said to have continued to grow before reaching 72.7 million euros in 2022.
One reason for the debt is said to have been the increasing rents that the department stores had to pay to the Signa Group. Between 2014 and 2015, the short and long-term rental and leasing obligations of KaDeWe dealers for the houses amounted to around 2.8 billion euros, and by 2022 the sum had already risen to 3.4 billion.
“It's a huge mess that Signa has driven the department stores into bankruptcy with excessive rents,” criticizes Hamburg SPD politician Markus Schreiber. The management is also said to have warned several times that the company was “over-indebted”. In total, a deficit of 92.3 million euros is said to have accumulated in 2022.
The federal government is said to have guaranteed it
In 2020, the federal government and the states of Hamburg, Berlin and Bavaria are said to have guaranteed the group 81 million euros for a loan of more than 90 million euros. The Federal Ministry of Economics and the states did not comment on the figures. According to information from the magazine, around a third of the loan has been repaid.
The first purchase offers have now been made for the insolvent department store chain Galeria Karstadt Kaufhof, which also belongs to the Signa Group. “There are a number of offers from an international range of bidders. We are now entering the second phase and discussions about possible binding offers,” said the provisional insolvency administrator Stefan Denkhaus to the German Press Agency on Thursday. “Wirtschaftswoche” had previously reported on it.
Denkhaus said it was very satisfied with the bidding process so far. Potential buyers should be given a little more time than planned. The phase for submitting binding offers will be extended by two weeks. These must be submitted by March 22nd at the latest. “We are now fully concentrating on discussions with interested parties who want to acquire Galeria as a whole,” said Denkhaus. All offers from investors who only wanted to take over individual houses or a smaller number of locations were put aside. The sale is expected to be completed in April.
Also looking for tenants
According to “Wirtschaftswoche”, the US investment company Apollo is among those interested. The Signa Group, the previous owner of Galeria, had already sold a number of department stores to the financial investor in 2020. However, people close to Apollo said on Thursday that there were no plans to acquire additional Galeria branches or the company as a whole.
Denkhaus is currently not only in discussions with potential investors, but also with department store landlords. He wants to renegotiate the rental agreements for some of the locations. The aim is to achieve standard market rents of 7 to 12 percent of sales. In some branches the company pays significantly more. If there was no accommodation, Denkhaus had not ruled out terminations and branch closures.
At the beginning of January, Galeria filed for insolvency with the Essen district court. It is the third bankruptcy within three and a half years. The insolvency proceedings are scheduled to open at the beginning of April. Galeria currently operates 92 department stores and claims to employ more than 15,000 people.
