Karstadt Kaufhof only closed its insolvency proceedings in autumn. But because the department stores have been closed for months, the company slips into trouble again.
Dhe department store group Galeria Karstadt Kaufhof is to negotiate with the federal government about financial aid amounting to several hundred million euros. This is reported by “Spiegel”, citing “people familiar with the negotiations”. Karstadt Kaufhof did not initially receive any comments on Friday, and the Federal Ministry of Economics did not comment on negotiations with individual companies upon request.
The department store group urgently needs money because the branches are closed again, because the costs run away. According to the report, Karstadt Kaufhof is negotiating a subordinated loan of “well under half a billion” euros.
“If we suddenly talk about another eight to ten weeks of closure of the shops, then no non-food company can survive without government aid,” the Spiegel quoted an unspecified company source. “We look into the tube for general help.” Bridging aid III can be used by companies with an annual turnover of up to 500 million euros, although the department store group surpasses this value. The company is expected to lose 60 million euros in sales every week. In the spring, before the department store group slipped into bankruptcy, the company was talking about up to 80 million euros per week. Karstadt Kaufhof had already negotiated a loan from KfW in spring 2020 because of the closed branches. The injection of money also failed due to the resistance of the house banks, and Karstadt Kaufhof described the negotiations as complicated at the time.
Freed from debts of 2 billion euros
The department store group has since gone through bankruptcy proceedings that it completed at the end of September. This enabled the company to free itself of 2 billion euros in debt, which could now simplify negotiations with banks. The rescue operation of the department store group also included significant cuts in the branch network: Originally 62 Karstadt and Kaufhof branches were supposed to close, after negotiations with numerous landlords about rent cuts, the number had fallen to less than 50. The headquarters in Essen with a total of 1200 employees will also be retained.
In an interview with the FAZ in October, Karstadt Kaufhof boss Miguel Müllenbach said that the company was debt-free and that it had built up a cushion. But at that time he also warned of another lockdown: “If there are larger closings, we don’t have a Galeria-Karstadt-Kaufhof problem, but a much bigger one,” said Müllenbach. “Then the entire stationary retail trade is affected – along with suppliers and service providers, each with their own tens of thousands of jobs.”