German department store chain KaDeWe, grouping the eponymous luxury department store in Berlin with Oberpollinger and Alsterhaus, is seeking protection from creditors. The retailer is suffering from excessive rents to its landlord… René Benko of Signa.
Expensive rent
Last Sunday, the doors of the KaDeWe remained unexpectedly closed. A day later, its owner reported that it is applying for insolvency under its own management. The intention in doing so is to continue operations in the three department stores, KaDeWe (Berlin), Oberpollinger (Munich) and Alsterhaus (Hamburg). Under the insolvency proceedings, KaDeWe intends to restructure the company, not liquidate it.
Not that the luxury department stores are performing badly: KaDeWe Group saw its sales rise by 24 % to 728 million euros in the 2022/2023 financial year, compared to the pre-pandemic financial year 2018/2019. However, the retailer does feel the effects of financial problems at property group Signa, which owns 49.9 % of KaDeWe Group, while Thailand’s Central Group has a 50.1 % stake.
In particular, the disproportionately high rents at the three locations make “sustainable, profitable economic activity almost impossible”, according to a statement by the company. Talks with Benko have so far brought no result. The insolvency proceedings should make it possible to get rid of the expensive lease.
