Klaus Hubert Görg, the interim receiver of the insolvent Arcandor group, which is the parent company of Karstadt and Quelle among others, sees little hope of finding an investor for the entire group. He is now concentrating on the new organization of each part of the group affected by the insolvency. Görg now plans to submit a plan for salvaging the various operations to a meeting of the creditors in early November.
The most vulnerable point of the entire group is the salaries of the employees. It is part of the receivership procedures that the wages are paid by the government – but only until Aug. 31. By then, the group and/or its parts will again be in charge of paying their staffs. The most hard-hit part of Arcandor is Primondo, the mail-order branch that controls Quelle and some specialty mail-order retailers such as Planet Sports, the big Munich-based boardsports retailer. Rumors say that the receiver would have no problem selling Primondo’s specialty retailers, but would have a hard time to find someone who would rescue Quelle, which is Primondo’s core business. It is said that Quelle would have to lay off roughly a third of its 10,500 employees until the end of the year.
The situation is apparently not that dramatic for Karstadt, but in the brick-and-mortar business Görg will face an uphill fight to find appropriate investors who would bring in fresh money. Currently, Karstadt runs 99 department stores and 27 specialty sports stores under the Karstadt Sports flag. The receiver is screening the underperforming outlets, notably 17 department stores and two sports shops. In return, Karstadt is not going to cancel its plans for three Karstadt Sports doors in Münster, Dresden and Essen, at the company’s headquarters.
The big question here is whether potential investors, such as Metro, are really after Karstadt itself or rather the locations that the retailer occupies. As reported, Thomas Middelhoff, the former chief executive of Arcandor, sold Karstadt’s real estate to lease it back from the new owners with whom Middelhoff was obviously connected. It is quite possible that potential investors are simply waiting until Karstadt is on its knees to have a stronger position when negotiating rental conditions.
