Galeria to close nearly half of its department stores

German department store chain Galeria Karstadt Kaufhof plans to close almost half (52 out of 129) of its German stores. The Belgian subsidiary Inno would not be affected, but may change hands soon.

Over 3,000 redundancies

Galeria speeds up its reorganisation plans: employees were informed on Monday that 52 of its current 129 stores will close. Cuts will also be made at the service centre and in facilities management, Lebensmittel Zeitung reports.

2,800 full-time employees will lose their jobs due to the store closures. In the service centre in Essen, 163 redundancies will be made, and another 30 in the regional IT service centres. For a while it looked like the facility management department would even be closed or sold altogether, but this has now been averted. There will, however, be 132 compulsory redundancies.

The stores that do remain open, are not completely spared either. Late last week, the German department store group’s insolvency plan became public, showing that the remaining department stores will have to shrink in size. The management also wants to save on labour costs by using more flexible and seasonal staff. Even the number of brands and products is to fall by 30 %.

100 million euros

In return, owner Signa promises to invest another 200 million euros in the ailing company, aiming to modernise the remaining stores over the next three years. That operation would cost 300 million euros, the remaining 100 million euros are to be found through cost cutting measures within Galeria.

At the end of March, Galeria will also meet with its creditors, who will have to make major concessions. The management asks them to waive virtually all outstanding claims, otherwise the chain threatens bankruptcy. Remarkably, Belgian branch Inno, which is separate from the reorganisation, could then end up in the hands of the German government.