Arcandor, the German group formerly known as Karstadt-Quelle, suffered a sales decline of 2.2 percent to €4.72 billion in the first quarter of its new financial year, which ended last Dec. 31. The management argues that a comparison with the same quarter of the previous year is difficult due to special effects such as the raise of the VAT from 16 to 19 percent in Germany and Karstadt’s anniversary sales in 2006. Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 9.6 percent to €204 million.

The group’s three branches - tourism (Thomas Cook), mail-order (Primondo) and brick-and-mortar retailing (Karstadt) - performed differently. Thomas Cook and the mail-order business, led by Quelle, increased their profitability. Instead Karstadt’s EBITDA fell significantly by €45.8 million to € 136.0 million.

Karstadt faced another significant decrease in sales, this time by 8.1 percent down to €1.32 billion. Arcandor explains this effect not only with the higher VAT, but also a massive renovation of several stores, entailing temporary shutdowns, plus the integration of more than 2,000 shop-in-shops, where the company is presumably sharing revenues with the brands themselves.

The group is particularly busy now with the renovation of its famous Karstadt Sports store near Berlin’s Zoo station, which will see its outdoor section expanded, and another one in the Steglitz district of the capital. A third sports store is reportedly going to be added in another area of Berlin soon.

The Karstadt department store in downtown Dresden has been added to the so-called premium group of prestigious locations, joining the stores in Frankfurt, Munich, Berlin (KaDeWe), and Hamburg (Alsterhaus).

Meanwhile Karstadt Warenhaus, the department store and sporting goods subsidiary of the group, has strengthened its board by hiring Stefan Herzberg who will be in charge of sales from March 1. He had similar responsibilities at Karstadt’s main competitor, Kaufhof. The latter scored apparently better than Karstadt in the last three months of 2007, reporting a sales decline of only 1.5 percent.

The sale of 51 percent of the shares of neckermann.de to the private equity investor Sun Capital, which was announced in the Fall of 2007, is expected to be concluded in mid-March, after the consent of local anti-trust authorities.