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Germany's KaDeWe Group files for insolvency



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Dior's Christmas window display at KaDeWe in Berlin (2022) Credits: Kristen Pelou / Dior / KaDeWe

The KaDeWe Group, which operates the luxury department stores KaDeWe (Berlin), Oberpollinger (Munich) and Alsterhaus (Hamburg), has filed for insolvency.

However, the stores will continue to operate, the company told the German Press Agency on Monday. Insolvency proceedings under self-administration have been applied for. The retail company emphasised that the rents at the three locations were a particular burden on the business. They made "sustainable, profitable operations almost impossible", it said.

The insolvency of the retail company The KaDeWe Group GmbH comes just a few weeks after the Signa network of companies owned by Austrian investor René Benko fell into difficulties. Signa holds a stake in the KaDeWe Group.

Companies that have good prospects of continuing their business operations usually apply for insolvency under self-administration instead of with the help of an insolvency administrator. It is a variant of insolvency law that aims to reorganise a company instead of liquidating it.

50.1 percent of the KaDeWe Group is owned by the Central Group of the Thai Chirathivat family and 49.9 percent by Signa Retail, which also owns Galeria Karstadt Kaufhof. Signa Retail announced at the end of November that it would wind up its business in an organised manner. Galeria Karstadt Kaufhof filed for insolvency proceedings three weeks ago.

Index rents of department stores 'disproportionately high'

At the end of November, KaDeWe managing director Michael Peterseim was still confident that the group would not be caught up in the Signa crisis. "Operationally, we are doing an outstanding job. All properties are recording rising sales even in difficult economic times," said Peterseim, according to the press release. "However, the index-linked rents are disproportionately high, they are not in line with the market - and are set to rise further." Numerous discussions with the landlord have not changed this.

The KaDeWe Group is the operator of the traditional department stores in Berlin, Hamburg and Munich. René Benko is its landlord via Signa.

According to the announcement on Monday, the KaDeWe Group generated sales of almost 728 million euros in the 2022/2023 financial year - an increase of almost 24 percent compared to the pre-coronavirus 2018/2019 financial year. The group says it employs around 900 people at KaDeWe in Berlin. In addition, there are around 200 employees at Alsterhaus, around 300 employees at Oberpollinger and a further 300 employees at the company headquarters in Berlin.

Consultant: Luxury continues to work

The head of retail consultancy BBE, Johannes Berentzen, estimates the rental burden of the KaDeWe Group at 13 to 20 percent of turnover, depending on the location. "For the majority shareholder Central, insolvency could be worthwhile in order to get out of the expensive rental agreements." Berentzen emphasised: "I am certain that all three stores will continue to operate." Luxury is working well despite the economic situation.

However, the doors of KaDeWe remained closed for Sunday shopping on 28 January in Berlin, contrary to the initial plan. Customers at the doors were not told the reason for this.

In the case of insolvency under self-administration, the management remains in office, but is supported by a so-called administrator from outside. The old management thus retains much of the power of disposal over the company. At the same time, the company is protected from enforcement and coercive measures by creditors. (DPA)