Karstadt retailer to close six stores
October 24, 2014
Following a marathon meeting of the supervisory board on Thursday, Karstadt executives said they had reached agreement on the closure of six of its stores in another bid to ensure the retailer's survival and pave the way for its return to profitability.
Board members said a store each would be closed in Hamburg, Stuttgart, Paderborn, Göttingen, Cologne and Frankfurt/Oder. It added that among the affected locations were conventional and low-budget stores as well K-Town subsidiaries specializing in young fashion.
The head of the works council Hellmut Patzelt said the closure would mean the loss of 2,000 jobs, what he called a "dark day for all the employees."
Stefanie Nutzenberger, head of the services union Verdi, said that Karstadt's management team had only been interested in cutting costs, rather than finding a way for the troubled retailer to improve turnover.
The supervisory board also named its chief, Stephan Fanderl as Karstadt's Chief Executive. The 51-year-old has decades of experience in the retail business and enjoys the trust of company owner Rene Benko.
Karstadt's deep fall
Once a symbol of prosperity for Germany's middle-class consumers, the Karstadt department store chain has been fumbling for one lifeline after another for years.
After taking over its struggling rivals Hertie and mail-order giant Quelle in the 1990s, Karstadt went through a major restructuring before going into administration in 2009.
Its new owner, Austrian real estate investor Rene Benko, paid one euro for the money-losing company last August. He bought it from billionaire investor Nicolas Berggruen, who had also acquired it for one euro in 2010 from the company's then-insolvency manager - and subsequently failed to make the major investments he had promised.
But the problems facing the once iconic retailer run far deeper than mismanagement. Many department stores are forfeiting ground to other, more dynamic forms of retail.
Online shopping, brand-specific outlets, discount stores and now ubiquitous shopping centers are all luring customers away from the traditional department store.
"There's no doubt that department stores are facing competition on a lot of fronts," said Torsten Waach van Wasen, a consultant with the firm Alvarez & Marsal. "Retailers have to move to multi-channel sales, both online and offline, in order to prosper."
hg,nz/bk (dpa, Reuters)