Ailing Galeria Karstadt Kaufhof in need of support again

German department store chain Galeria Karstadt Kaufhof, the parent company of INNO in Belgium, is once again in dire straits. The company, fighting for its survival, has applied for state aid for the third time.

Not future-proof

The war in Ukraine, the energy crisis and low consumer confidence are playing tricks on Galeria Karstadt Kaufhof. On energy alone, the retailer expects an additional expenditure of 150 million euros over the next two years. According to CEO Miguel Müllenbach, the department store chain finds itself in a threatening situation and is therefore asking for financial support from the German government. Not for the first time: since the big merger, the company has already knocked on the government’s door twice, receiving a total of 680 million euros.

In recent years, the merged group closed dozens of stores and made thousands of employees redundant in an attempt to return to profitability. Without much success so far. Critical voices reject the demand for state aid: according to many observers, Galeria’s business model is not future-proof. The department store chain still has 131 stores in Germany – which is far too many – and lacks a sharp profile. Only department stores that bet on luxury and focus on the big cities still have a future. What the possible consequences are for the Belgian subsidiary INNO – which says is on its way to profitability – is still unclear.