German department store group Galeria Karstadt Kaufhof is taking a terrible hit from the coronavirus, reducing turnover by up to a billion euros. Management says stores could be closed and jobs axed to cut costs, but the Belgian branch would escape.
Protection
On 1 April, the group was granted protection against creditors, and part of that procedure means the group has to file a restructuring plan before the end of June. Currently the corona damages are estimated to be just over half a billion euros, but as fewer customers visit the now reopened stores and their eagerness to buy things is very low, that amount may increase to up to a billion euros.
More and more signals point to the possibility that a number of department stores will be closed, leading to significant job losses. Management has now written a letter preparing employees for such a fate, Manager Magazin writes. Frank Kebekus, who has been appointed by the court to manage the group during the insolvency procedure, wrote that “this cost-cutting operation will be a lot tougher than we all would want”, although he fails to specify how many jobs and stores are threatened or when the axe would fall.
However, in a reaction to one of the RetailDetail editors, GKK’s Belgian branch Galeria Inno says it does not feel threatened. Even though ailing companies often choose to weed out foreign locations first, Galeria Inno’s Elly Zwinnen says she does not feel worried. “I can confirm you that possible steps by Galeria Karstadt Kaufhof will not influence us as Belgian subsidiary”, Zwinnen adds.
