A court has given the green light for the Galeria department store chain to restart. The chain has far fewer branches than before. The company hopes that it has downsized to a healthy size and that things are looking up.
Germany’s last large department store group, Galeria, can dare to make a fresh start. The Essen District Court announced that the insolvency proceedings were lifted at the end of the month. On August 1, the former Galeria Karstadt Kaufhof (GKK) will start operating under the new company name Galeria. Nine branches will be closed in August, and on September 1, the company will continue with 83 locations – this number of branches is to remain permanent.
The company, which has around 12,000 employees nationwide, says that the insolvency proceedings have been successfully concluded after just under seven months by implementing the insolvency plan. On August 1, the US investment company NRDC and a holding company owned by the entrepreneur Bernd Beetz will become the new owners of the group.
Demonstrative confidence
The insolvency administrator Stefan Denkhaus is optimistic about the future of the company. The company has managed to reduce costs to a reasonable level in many areas, says the lawyer. “As a medium-sized company, Galeria is now in a good economic position and is starting the future with available liquidity in the nine-digit range.”
In politics, new governments are usually given a grace period of 100 days. “I would like Galeria to get that too with the new owners,” says Denkhaus. “It would be best to have 300 days to implement the future concept step by step.”
New owner Bernd Beetz says that thanks to the efforts of everyone involved, a basis has been created that shows the company a clear future perspective. “Now we will start a new corporate culture in close cooperation with management and the workforce.”
Concepts should be implemented to make branches more attractive, to reward performance more and to increase customer satisfaction. “We are building a new, self-confident Galeria, whose 83 locations in the city centers are an important and reliable anchor tenant and a source of footfall for surrounding specialist shops and restaurateurs,” says Beetz.
The department store group recently sold its 70 travel agencies to the ADAC. Galeria will concentrate on its core competency as a department store, says company boss Olivier Van den Bossche. “There will also be branch modernizations in order to offer an attractive shopping atmosphere and an ideal shopping experience.”
In 2020 there were twice as many branches
The department store group is going through a crisis, which is also due to the boom in online retail and the associated decline of shopping malls in city centers. In the 1990s there were still several competing department store operators in Germany, then the market concentration began: Kaufhof swallowed Horten and Karstadt took over Hertie. In 2009, Karstadt went bankrupt, and the situation remained tense even after that. In 2018, the former rivals merged to form Galeria Karstadt Kaufhof. The shrinkage continued: while there were 171 branches in 2020, there will be less than half of that in the future.
Source: Stern
