Germany: KaDeWe department store group files for bankruptcy

The retail group that owns Berlin’s iconic KaDeWe department store and two other major German luxury shopping centers has declared bankruptcy, the company announced in Berlin on Monday.

KaDeWe Group, part of the troubled Signa real estate empire, is 49.9% owned by Signa Retail, an Austria-based real estate empire that filed for insolvency last year. The other 50.1% is held by the Central Group of Thailand.

The KaDeWe Group said “exorbitant rents” in Berlin, Hamburg and Munich “make it almost impossible to operate profitably in the long term.”

Since the start of the pandemic, rent has increased 37%, he said.

“There is no doubt that the group can have a strong future with normal rents,” added KaDeWe CEO Michael Peterseim.

KaDeWe: a Berlin institution

KaDeWe, pronounced “kah-day-vay”, is an abbreviation of “Kaufhaus Des Westens”, which can be loosely translated as “Western department store”.

Its emblematic Berlin nave, opened on Wittenbergplatz in 1907, has become an important tourist destination in the German capital, rivaling the Brandenburg Gate, the Reichstag parliament building and the television tower on Alexanderplatz.

The group also includes the Oberpollinger department store in Munich and the Alsterhaus in Hamburg.

Petersheim said all three stores reported strong sales even during difficult times.

Stores must continue operating

The head of retail consultancy BBE, Johannes Berentzen, estimated that KaDeWe Group’s rents represent 13% to 20% of store turnover, depending on location.

“For majority shareholder Central, insolvency could be worth it to get out of expensive leases,” Berentzen said.

“I am sure that the three stores will continue to operate”, he added, highlighting that luxury retail continues to perform well.

The head of the Berlin-Brandenburg Commercial Association, Nils Busch-Petersen, said he is also optimistic about the future of the store.

“KaDeWe is doing very well,” he told RBB. “And insolvency means an effort to exit contractual relationships that are toxic.”

zc,mf/wmr (dpa, Reuters, AFP)

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