The crowds in department stores were once great and Karstadt and Kaufhof appeared as competitors. The chains have long since shrunk to form a corporation that is once again pulling out the red pencil.
After Galeria Karstadt Kaufhof filed a protective shield procedure again, trade unionists and politicians are demanding that owner René Benko make a strong financial contribution to the rescue of the ailing department store group. The workforce is wondering “where the owner is in this existentially highly threatening situation for 17,400 people and their families,” said Verdi federal board member Stefanie Nutzberger. Additional money is now needed for the company. “There are clear expectations of the owner.”
Against the background of the energy crisis and the slump in consumption, the management announced on Monday that at least a third of the 131 department stores in Germany are to be closed and layoffs for operational reasons are unavoidable. Trade union activist Vorteilberger called for the preservation of as many jobs as possible. The group management must present a viable concept for the future. “The employees made many concrete suggestions for a successful future, which were not listened to by the management.”
On Monday, the company had to seek rescue in protective shield proceedings for the second time in less than two years. The 680 million euros in financial aid from the federal government were not enough to get the company on track. Negotiations on further state aid have ended. Instead, the management now wants to make a cut and separate from loss-making parts of the business.
Not the first shield
In 2020, the company had already gone through a protective shield procedure. In the case of the insolvency variant aimed at restructuring, a court-appointed administrator takes over the supervision of the rescue. Management retains control, but is advised by an external restructuring expert. During the renovation in 2020, around 40 branches were closed, around 4,000 jobs were cut and more than two billion euros in debt were canceled.
“It’s a dramatic crash of two traditional department store companies,” said Reinhard Houben, economic policy spokesman for the FDP parliamentary group.
While the FDP youth organization Junge Liberale spoke out against further state financial aid, Houben does not want to rule this out for the future. “It’s just not an ordinary company, it’s an elementary part of many inner cities.” If this component were to be removed, the attractiveness of the shopping areas as a whole could suffer. Houben urged the company to be more transparent. In addition, the entrepreneur Benko should participate in the rescue with a larger contribution from his personal assets before the state should take action again.
Was it just real estate?
Left party leader Martin Schirdewan accused Benko of never having been concerned with running the department store, only with real estate. “The public sector must not reward billionaire Benko’s real estate speculation with further aid.” Instead, the state should reclaim the millions already paid out. When he joined the department stores, Benko assumed responsibility for 17,400 employees. “Now the owners have to fulfill their responsibility and invest additional money in the operation of the department stores from their own resources.”
Concerns about vacancies in the inner cities were raised among municipal representatives. “Further closures of branches of the Galeria department store chain would be a deep cut for the cities affected,” said Markus Lewe, President of the German Association of Cities. “With the department stores, important places of supply and encounters would be lost.” As many locations and jobs as possible should be preserved.
When asked why the state did not step in again, the Federal Ministry of Economics said that the company had decided to go to the district court. I don’t want to comment on that.