Karstadt-Quelle has sold Fritz Berger, leaving the embattled German retail group, which is looking for a new corporate name, with only its Karstadt Sporthouses as a specialty business in the sporting goods sector. Fritz Berger claims to be Europe’s biggest mail order house specializing in the sale of caravans, camping and leisure equipment, with a busy e-commerce site. Including also 16 multi-brand stores and 4 Jack Wolfskin franchises, it reached sales of about €33 million last year.
Fritz Berger had been taken over in 2000 by Neckermann, one of the two mail order divisions of Karstadt-Quelle. It’s now being sold to Arques Industries, the German investment company that already took over last year another sports property of the Karstadt-Quelle group, Golf House.
In addition to Golf House, Karstadt-Quelle previously sold off Runners Point and other sports assets, including a chain of fitness clubs. It also closed down a pilot outdoor and bike store in Munich. While considering its big 33 Karstadt Sporthaus superstores as an unlikely further option for a disposal, company officials indicate that their future development strategy will be mapped out only after the Football World Cup, which has been generating very good sales within the chain in recent weeks.
Karstadt’s future strategy in the sporting goods sector will fall on the shoulders of Peter Wolf, a 47-year-old executive who led the food business and the brand strategy of Tchibo, the large retail and cosmetics conglomerate in Hamburg. Starting Aug. 1, he will run the Karstadt Warenhaus subsidiary, which is responsible for the Sporthouses and for the group’s remaining department stores, replacing Helmut Merkel who is going to concentrate on sourcing, logistics and information technology. Merkel is reportedly negotiating a strategic alliance in Asian sourcing with Li & Fung.
Sporting goods continue to be sold through the group’s department stores as well as through its big mail order and e-commerce operations. The sale of its real estate and many other assets is going to eliminate all excess debt this year, and Thomas Middelhoff, chairman and chief executive of Karstadt-Quelle, indicated earlier this week that the extraordinary cash will be reinvested in the group’s remaining operations. He told shareholders that he wants it to generate by 2008 operating profit of more than 1.1 billion before amortization (EBITDA) on revenues of around €18 billion, with an equity/debt ratio of at least 20 percent.
Karstadt-Quelle has offered to acquire from Lufthansa all the shares it doesn’t own in Thomas Cook, the travel agency. Middelhoff also sees potential for development of new specialty mail order and internet catalog and for the mail order business in Russia. Mail order was in fact the only segment of the group’s business whose results fell below plan in the 1st quarter of this year. Sales and profits were higher than a year ago at Karstadt Warenhaus.
Instead, the Metro group has reported a 0.9 percent sales decline to €841 million for its own Kaufhof department operation, Kaufhof, with a 1.5 percent drop in Germany and a 5.8 percent increase in Belgium. Its cash & carry business grew by 8 percent to €6.6 billion, with over 80 percent of the revenues generated for the first time outside Germany.
