Signa: The next major bankruptcy

The German KaDeWe group with the luxury department stores KaDeWe (Berlin), Oberpollinger (Munich) and Alsterhaus (Hamburg) has filed for bankruptcy. The company announced on Monday that the houses will continue to operate. The group also includes the Lamarr department store on Vienna’s Mariahilfer Straße, which is still under construction. The Signa Group, led by Tyrolean investor Rene Benko, holds 49.9 percent of KaDeWe shares, the Thai Central Group 50.1 percent.

• Read more about this: German KaDeWe Group and Lamarr are said to be on the verge of bankruptcy
• You might also be interested in: Signa: Insolvency administrator denies 99 percent of claims

The insolvency of the trading company The KaDeWe Group GmbH follows a few months after the Signa network of companies ran into difficulties. An application was therefore made for insolvency proceedings under self-administration. The trading company emphasized that the rents at the three locations in particular are putting a strain on business. They made “sustainable, profitable economic activity almost impossible,” it was said. Companies that have good prospects of continuing business operations usually apply for insolvency under self-administration rather than with the help of an insolvency administrator. It is a variant of insolvency law that aims to restructure a company instead of winding it up.

Video: German KaDeWe group with Viennese Lamarr filed for bankruptcy

Question marks at Lamarr department store in Vienna

Due to the insolvency of the KaDeWe Group, there are also many question marks about the planned Lamarr department store in Vienna. The Vienna project company for the shopping temple has not yet filed for bankruptcy. An official construction stop has not yet been announced, but the opening planned for the beginning of 2025 is becoming more and more distant. There has been no significant activity at the Lamarr construction site since November. The shell construction was completed at the end of June 2023 and Signa invited media representatives to a rooftop press event. Several weeks ago, the district head of Vienna Neubau called on the city of Vienna to take action so that the Lamarr did not degenerate into a ruin. Shortly afterwards, the city of Vienna said that the building was expected to be completed.

There is already someone interested in the Lamarr. Spar CEO Hans Reisch was interested in an interview with the “Salzburger Nachrichten” at the weekend. “We tried very hard to get the Hedy Lamarr – the Leiner on Mariahilfer Strasse back then – before we sold it to René Benko, but we didn’t get the chance,” said Reisch. “That would still be an asset that we would be interested in. But nothing is concrete.”

The umbrella company is Signa Retail Selection, which is based in Switzerland and which also includes the already insolvent German department store chain Galeria Karstadt Kaufhof. Signa Retail Selection and Signa European Invest Holding AG, in which Signa’s trading interests in Globus, Selfridges and the KaDeWe Group are bundled, obtained a so-called provisional moratorium last December. The moratorium in Switzerland is a legally stipulated procedure for debt restructuring.

Lots of open questions

It remains to be seen whether and at what price the listed Central Retail Corporation, led by the Thai billionaire Chirathivat family, is willing to take over the Signa shares in the KaDeWe Group, Globus and Selfridges. The group has not recently made a public statement about its European business. The market capitalization of the Thai trading group on the stock exchange currently amounts to 210 billion baht (5.5 billion euros). The properties of the KaDeWe Group, Globus and Selfridges as well as the associated trading business are divided into separate companies and could also be sold off individually.

KaDeWe managing director Michael Peterseim was still confident at the end of November that the group would not get caught up in the Signa crisis. “Operationally, we are doing an outstanding job. All stores are recording increasing sales even in difficult economic times,” said Peterseim, according to the announcement. “However, the index rents are disproportionately high, they are not in line with the market – and are expected to continue to rise.” Numerous conversations with the landlord didn’t change anything.

728 million euros generated

According to Monday’s announcement, the KaDeWe Group generated sales of almost 728 million euros in the 2022/2023 financial year – an increase of almost 24 percent compared to the pre-Corona financial year 2018/2019. According to its own information, the group employs around 900 people at KaDeWe in Berlin. There are also around 200 employees in the Alsterhaus, around 300 employees in the Oberpollinger and another 300 employees in the Berlin headquarters.

The head of the BBE trading consultancy, Johannes Berentzen, estimates the KaDeWe Group’s rental burden to be between 13 and 20 percent of sales, depending on the location. “For the majority owner Central, bankruptcy could be worthwhile in order to get out of the expensive rental agreements.” Berentzen emphasized: “I am sure that things will continue in all three houses.” Luxury works well despite the economic situation.

KaDeWe doors remain closed

However, on the Sunday shopping Sunday in Berlin on January 28th, the doors to KaDeWe remained closed, contrary to what was initially planned. Customers at the doors were not told the reasons.

In the event of self-administration insolvency – as envisaged by the KaDeWe Group – the management remains in office, but is assigned a so-called administrator from outside. The old management thus retains large parts of the power of disposal over the company. At the same time, the company is protected from enforcement and coercive measures by creditors.