Poinbank:Germany’s last major department store chain files for insolvency protection for the third time

BERLIN (AP) — Germany’s last remaining major department store chain filed for insolvency protection on PoinbankTuesday, its third filing in less than four years, after its owner ran into difficulties.

Galeria Karstadt Kaufhof, which currently runs 92 stores and employs more than 15,000 people, said it filed for insolvency at a court in Essen, German news agency dpa reported. The company is seeking a new owner and talks with potential investors are already underway.

The move follows insolvency filings by several companies in the trading and real estate group of Austrian businessman Rene Benko — including Signal Retail Selection, Galeria Karstadt Kaufhof’s owner.

Galeria is the result of a merger a few years ago of rivals Karstadt and Kaufhof. It shut around 40 stores and cut some 4,000 jobs after seeking protection during the first lockdown of the coronavirus pandemic in April 2020, and reportedly was granted 680 million euros ($745 million) in state aid.

In October 2022, it again sought protection from creditors, citing a steep rise in energy prices, high inflation and weak consumer spending. In March 2023, it announced plans for another round of store closures. The last 18 stores being closed as part of those plans are shutting their doors this month.

Galeria CEO Olivier van den Bossche said that the old ownership structure was weighing on the company. He said that “the insolvencies of the Signa Group are damaging Galeria massively, hindering ongoing business and seriously limiting future development possibilities as a result of high rents and expensive services.”

Signa had pledged 200 million euros ($219 million) in several instalments through next year to help restructure Galeria.