Galeria Karstadt Kaufhof: 52 branches before closing

52 of 129 branches are to be closed. According to a report by the general works council, the company has now also announced this. The closures are to take place in two waves on June 30, 2023 and January 31, 2024. According to the works council, more than 5,000 jobs are threatened.

“This is a pitch black day.” The Verdi union announced that it would fight for every job. Galeria now needs new management, demanded Stefanie Nutzberger, who is responsible for retail at Verdi. Galeria is now “setting the course for a secure future,” the company said. 77 branches and around 11,000 jobs were retained.

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No regional focus

The general works council explained that the effects of the corona pandemic and the Russian attack on Ukraine are only partly responsible for the plans. Rather, it was the lack of a strategy for a regional orientation, criticized the employee representatives. “52 branches cannot be continued,” explained Galeria. For them there is “in view of the general economic conditions, the local conditions and also after intensive negotiations with landlords and cities no positive prospects for continuation”. The German Association of Cities had warned that the closure of department stores would be “a deep cut for the cities affected”.

“Today is undoubtedly a difficult day for all of us,” said Arndt Geiwitz, Galeria’s chief representative. Galeria fought for every location. The affected branches would be closed in two waves on June 30, 2023 and January 31, 2024. The list for the end of June includes branches in cities from Celle to Wiesbaden, followed by a further 31 stores from Bayreuth to Wuppertal at the turn of the year.

Remaining businesses become more independent

The remaining branches should in future “position themselves more clearly in the segments of clothing, beauty and home”, announced Galeria. “In order to strengthen local structures, we are giving the branches more autonomy,” promised Galeria boss Miguel Müllenbach. The department store has a future in Germany.

For the loss of their jobs, the affected employees received a severance payment of twice the monthly gross salary, the general works council explained. “The population must be aware that there will only be an attractive city center if the regional retailers are used,” the committee appealed to consumers. The continuation of Galeria will now be decided at a creditors’ meeting on March 27th.

One crisis after another

The department store chain has been sliding from one crisis to the next for years, and the employees have repeatedly had to tremble for their jobs. Most recently, the official requirements in the Corona crisis had put a strain on business, the group resorted to state aid, and then the branches suffered from consumer reluctance after the Russian attack on Ukraine. In addition, the group, which belongs to the multi-billion dollar Signa Holding of the Austrian investor Rene Benko, who had merged Karstadt and Kaufhof, was struggling with home-made problems. More than two years ago, during the insolvency proceedings at the time, Galeria Karstadt Kaufhof had already closed a good 40 of the 172 branches at the time, with around 5,000 employees losing their jobs. In February, the current insolvency proceedings were opened by the district court of Essen.

Karstadt and the former Metro subsidiary Kaufhof can look back on a steady decline in the face of competition from online retailers from Amazon to Zalando and from shopping centers. Ever new concepts for the chains were presented without lasting success, managers from Thomas Middelhoff to Stephan Fanderl, owners like Nicolas Berggruen, the North American retail chain HBC or the Signa Holding of the investor Rene Benko had tried to restructure the chains, whose merger was sealed in 2018 had been. Benkos Signa has been in charge at Galeria Karstadt Kaufhof since 2019, HBC had withdrawn. Signa also controls numerous department store properties. The employees had repeatedly appealed to Benko to stand by his responsibility as the owner and to take money for a long-term renovation.