According to media reports, Galeria Karstadt Kaufhof’s new owners are poised to inject up to €100 million into the company to revamp its remaining department stores over the next two to three years.
The insolvent German department store chain sees Sunday shopping as a cornerstone of its restructuring efforts, according to the German weekly new magazine Der Spiegel. The new owners will seek backing from local authorities to open the stores once a month on Sundays. However, it is unclear whether the new owners will be able to implement the plan, as its feasibility depends on overcoming long-standing, seemingly immovable regulatory hurdles. The number of Sundays allowed to be open for business currently varies across Germany. Bavaria only allows four per year, Berlin eight.
Furthermore, to enhance efficiency and reduce operational costs, Galeria plans to transform its department stores into hubs for “store-in-stores,” with individual brand manufacturers taking on more direct responsibility, according to the media reports. In a further bid to streamline operations and cut costs, the focus will shift towards products like perfumes, cosmetics, women’s underwear, handbags, shoes, and accessories. In particular, Galeria’s CEO Olivier Van den Bossche highlighted Galeria’s potential in product categories such as shoes and fashion, which remain pivotal drivers of the company’s sales and earnings.
Galeria also aims to strengthen its presence in the beauty sector alongside established retailers like Douglas by leveraging the expertise of its co-owner, Bernd Beetz, who previously led US cosmetics giant Coty.
Earlier this month, media reports revealed that 16 out of the existing 92 Galeria stores face closure as part of the insolvency proceedings, pending approval from the creditors’ meeting scheduled on May 28. However, there is still hope for the department stores in Oldenburg, Berlin-Spandau and Mannheim, which are on the list of planned closures but reported “positive developments” in negotiations with landlords. The number of Galeria stores had already halved in the three and a half years since its first bankruptcy filing, and there are currently only 92 left.
Out of the approximately 12,800 employees, around 11,400 are expected to keep their jobs, while 1,400 face job cuts. The insolvency administrator Stefan Denkhaus had previously announced a sharp reduction of the workforce at Galeria’s headquarters in Essen, with half of the 900 existing jobs to be cut. Meanwhile, as the insolvency proceedings progress, Galeria prepares for a symbolic relaunch, shedding the “Karstadt” and “Kaufhof” names to continue as “Galeria” to mark a fresh start.
The ailing department store chain filed for bankruptcy on Jan. 9, 2024, marking its third insolvency in three and a half years. It filed for bankruptcy for the first time in 2020, seeking state aid amid the Covid-19 pandemic after many consumers turned to online shopping. A second bankruptcy filing followed in 2023. On April 1 this year, the Essen District Court opened insolvency proceedings.
Van den Bossche cited the financial turmoil stemming from the insolvencies of the Signa Group and its previous owner, René Benko, as a primary factor behind the company’s troubles. The Austrian entrepreneur had originally pledged €200 million for the relaunch of Galeria, but the promised funds failed to materialize following Benko’s bankruptcy. It was then revealed in early April that a consortium led by the US investment firm NRDC and entrepreneur Bernd Beetz’s BB Kapital SA would be granted the contract to operate Galeria’s 92 locations.
