Last major German department store Galeria Karstadt Kaufhof closes some stores

NOS News•today, 11:26

Germany’s last major department store, the ailing Galeria Karstadt Kaufhof, is closing 16 of its 92 stores. 1,400 of the 12,800 employees will also be dismissed.

It was previously announced that 900 of the 1,800 people at the head office will lose their jobs. The head office in Essen will close and be moved to a branch building in Düsseldorf.

The department store is in financial trouble. According to the curator, when designating the branches that should be closed, the interests of employees and the impact on city centers were taken into account. Dozens of German cities have been in suspense in recent weeks about which branches can remain open.

Galeria Karstadt applied for a deferment of payment for the third time in more than three years in January. According to CEO Olivier Van den Bossche, this was partly due to the payment position of the Austrian Signa group, the owner of the group. As a result, the money promised for modernizing the stores was no longer available.

Two cooperating investment companies, the American NRDC Equity Partners and BB Kapital from a German entrepreneur, now want to take over the department store chain. The German investor says that this intervention provides a better sustainable and economic basis for the future of the department store. The intention is for the takeover to be completed in July.

The American company NRDC is owned by the same owner as the Hudson’s Bay Company, Richard Baker. Hudson’s bought the department stores before, in 2015, when current Galeria CEO Van den Bossche was in charge. But the investor gradually withdrew after the merger with Signa. In 2019, Hudson’s disappeared from Europe completely, after the failed takeover of V&D.

The number of shops in German city centers has been steadily decreasing since 2015. Department stores have traditionally attracted many people to the city with their wide range of products, but have faced a lot of competition from online stores for years. The corona pandemic has accelerated that trend.