German department store chain Galeria Karstadt Kaufhof is on the brink of collapse and is asking the German authorities for state aid in the form of emergency loans. So far, however, it has not had that much success.
80 million euros lost every week
Galeria Karstadt Kaufhof has been negotiating an aid package with the German state bank since last Wednesday: the group's board of directors is asking for urgent state aid, as it would lose more than 80 million euros in turnover every week, while the costs continue to rise.
However, negotiations seem to have hit a rough patch, as many of the government's aid programmes are only available to companies that were previously healthy and got into trouble purely as a result of the corona crisis. In addition, 10 to 20 % of the total bail-out sum should come from commercial banks, and most banks seem unwilling to take on the risk with Galearia Karstadt Kaufhof. Over the last few days, TUI and Ceconomy (MediaMarkt's holding company) did secure billions in emergency financing.
Alternative rescue plan
Galeria Karstadt Kaufhof is now looking at other options and has brought on external experts who, according to an internal document viewed by TextilWirtschaft, are familiar with particularly difficult rescue operations. Owner Signa also says to be willing to provide "substantial financial support", which should make it easier for the federal government to agree to a bail-out.
In the meantime, the department store group's 28,000 employees fear for the future of their chain, as well as that of many other retailers. They ask for urgent measures by Chancellor Merkel: not just for them, but also for the tens of thousands of jobs threatened by the Covid-19 crisis at suppliers and in the inner cities of Germany. Large sections of Galeria Karstadt Kaufhof's employees have already been subject to reduced working hours and significant cutbacks in material and personnel costs.