Germany: Last major department store to close more branches

Germany’s last major department store chain, Galeria Karstadt Kaufhof, plans to close 52 more of its stores after closures on a similar scale less than three years ago, the company’s board of employees said on Monday.

The plans are being announced months after the Gallery filed for insolvency protection for the second time in October, having already done so during the first lockdown of the COVID pandemic in April 2020.

At the time, it closed 40 stores, bringing the current number to 129, and cut about 4,000 jobs.

Closures this time could cost more than 5,000 jobs, the council said, calling it “a bleak day”.

What are the problems with the Gallery?

Galeria Karstadt Kaufhof, the result of a 2018 merger between then-rivals Kaufhof and Karstadt, sought creditor protection in late October, citing a sharp rise in energy prices and weak consumer spending.

The staff board said management has already given several reasons for the planned closures, including rent prices, condition of buildings, lack of investment and demographic development, and falling consumer purchasing power in several locations.

The staff board, meanwhile, blamed management for failing to come up with regional strategies, saying the coronavirus pandemic and the Russian attack on Ukraine played only a minor role in the network’s recent decline.

Galeria and other department stores in Germany also faced increasing competition from online retail services and shopping malls.

The future of the Gallery will be decided at a meeting of creditors on March 27th.

tj/air (AP, Reuters, dpa)

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