Germany: Last major department store to shut more branches

Germany's last major department store chain, Galeria Karstadt Kaufhof, plans to shut 52 more of its stores after closures on a similar scale less than three years ago, the company's employee council said on Monday.

The plans are being announced months after Galeria filed for insolvency protection for the second time in October, having already done so during the first lockdown of the COVID pandemic in April 2020.

Back then, it closed 40 stores, bringing the current number to 129, and cut some 4,000 jobs 

The closures this time around could cost more than 5,000 jobs, the council said, calling it "a bleak day."

What are the problems at Galeria? 

Galeria Karstadt Kaufhof, the result of a 2018 merger between then rivals Kaufhof and Karstadt,  sought protection from creditors in late October, citing a steep rise in energy prices and weak consumer spending.

The employee council said management had now given it a number of reasons for the closure plans, including rental prices, the condition of buildings, a lack of investment, and the demographic developments and fall in consumer purchasing power at the various locations.

The employee council, for its part, blamed the management for its failure to come up with regional strategies, saying that the coronavirus pandemic and the Russian attack on Ukraine had played only a minor role in the chain's recent decline.

Galeria and other department stores in Germany have also faced growing competition from online retail services and shopping centers.

The future of Galeria is to be decided at a meeting of creditors on March 27.

tj/ar (AP, Reuters, dpa)

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