Essen: Decision made in favor of Galeria Karstadt Kaufhof – the group is saved

Galeria Karstadt Kaufhof in Essen saved after a long discussion

The meeting lasted over seven hours. A result was actually expected by noon. But the creditors did not make the decision easy for themselves. A lot of money is at stake for them. You are now giving up a total of 2.2 billion euros. The restructuring plan had been fighting for months, it also means that almost 6,000 jobs and 50 branches of the group will close.

Kaufhof on Willy-Brandt-Platz and Karstadt Sports in Limbecker Platz in Essen are also affected. They will close in October. The Karstadt branch in Limbecker Platz was only saved after renegotiating the rent. The Verdi union had also advised approving the restructuring plan. Losing the 5,900 jobs is better than losing them all, a spokesman told our Radio Essen city reporter before the meeting.

Creditors’ meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.© Radio Essen / Kostas Mitsalis

Creditors’ meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.

© Radio Essen / Kostas Mitsalis

Essen: Creditors of Galeria Karstadt Kaufhof forego a lot of money

With the decision to approve the restructuring plan, the creditors waived a large part of their claims. In total, it is a sum of over 2 billion euros. In addition, the creditors blessed the downsizing and the branch closings. Around 50 branches will close nationwide. Jobs are also being saved at the corporate headquarters in Schuir on the Bredeney border. In contrast, the focus is on logistics in Vogelheim.

Creditors' meeting Galeria Karstadt-Kaufhof to decide on the future at Messe Essen.
Creditors from Galeria Karstadt-Kaufhof before the decision on the future before Messe Essen.© Radio Essen / Kostas Mitsalis

Creditors from Galeria Karstadt-Kaufhof before the decision on the future before Messe Essen.

© Radio Essen / Kostas Mitsalis

Creditors’ meeting in the largest exhibition hall in Essen

The Essen district court had rented the largest exhibition hall for the creditors’ meeting under corona conditions. This is Hall 3. The meeting was not open to the public. Our Radio Essen city reporter was there. In 2009 there was a similarly large creditors’ meeting in Essen. That was the one for Arcandor, the Karstadt mother at the time. The Grugahalle was used for this at the time.

More news from Essen

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Report from the University of Bonn: Hygiene Institute considers the square meter limit to be incomprehensible

Galeria Karstadt Kaufhof criticizes the 800 square meter limit when shops reopen. An expert opinion commissioned by the department store group is now available. .

Allegedly large tax relief planned for companies

Closed shop space

The economy should be kept running with tax relief.


(Photo: dpa)

Dusseldorf The federal and state governments are planning significant tax relief for companies due to the corona crisis. The economy could be relieved of current past losses by 15 billion euros just by changing the way past profits were offset. This is reported by the “Spiegel” on Friday evening.

The tax department heads of the federal and state finance ministries are currently advising on the generous expansion of the possibilities with which companies can offset current losses with past profits. It is conceivable to extend the so-called loss carry-back to the past five years. So far, it only applies to the previous year.

It is also under discussion to raise the amount previously capped at one million euros. So that the companies do not have to wait for the tax return next year, they should already be able to claim part of their profits from the previous year as a loss. There is a 20 percent stake in the room, which they could use to claim tax refunds from the tax offices, writes the “Spiegel”.

According to the report, the department head group is also considering postponing the payment of income tax by one month. The potential for more liquidity here would be another 20 billion euros. Sales tax payments could also be deferred, which could mean a deferral of payments totaling up to 25 billion euros. However, the payments are not waived.

The measures aim to avoid short-term liquidity bottlenecks at companies. Sooner or later the tax effects would be reflected in the state budget anyway.

The majority of companies in Germany suffer from drop in sales and production losses due to the shutdown. The global supply chains are also currently under great pressure. According to a survey available to the Handelsblatt newspaper, every second medium-sized company (51 percent) is on the verge of an economic shutdown should continue for another four weeks. More than three quarters of companies and the self-employed (76 percent) indicated that government aid paid so far was not sufficient to meet their financial needs.

Even large corporations like Adidas had recently drawn on KfW credit lines. On Friday, the Karstadt Galeria Kaufhof department store group filed a lawsuit to open its branches in order to avoid financial loss. The federal and state governments had also presented a plan on Wednesday to cautiously relax the current measures.

More: The IMF expects the worst economic crisis since the Great Depression in 1929.

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Karstadt Kaufhof complains about opening branches in NRW

Kaufhof in Cologne

The owner Signa merged Karstadt and Kaufhof and has been running them under the common name Galeria Karstadt Kaufhof since March.

(Photo: picture alliance / dpa)

Dusseldorf The ailing department store giant Galeria Karstadt Kaufhof is taking legal action against the closure of its branches in the corona crisis. The group has filed a lawsuit against the Münster Higher Administrative Court against the fact that department stores in North Rhine-Westphalia are not allowed to open.

According to the court, the country has now been given the opportunity to comment. A decision could be made in the coming week. A group spokesman initially did not want to comment.

Galeria Karstadt Kaufhof with its 28,000 employees is particularly affected by the store closures. Except for food and drugstore departments, which are separately accessible, all houses must remain closed due to the corona crisis.

According to the company, the company therefore misses a turnover of around 80 million euros every week. If the closure lasts until the end of April, the loss of sales should have totaled half a billion euros.

The governments had announced that the shops would gradually reopen on Monday. However, in a first step, only shops with an area of ​​less than 800 square meters are allowed to open. The Karstadt and Kaufhof stores have an average sales area of ​​12,500 square meters.

However, the state of North Rhine-Westphalia has embarked on a special route: it also allows furniture stores, including those of the large Ikea chain, and baby specialty stores to be opened. Galeria is not covered by this regulation. Several retail chains and associations had already criticized that this would result in an arbitrary distortion of competition.

Another way out remains Galeria in North Rhine-Westphalia: The state government has already announced that it should not be possible in NRW to reduce the sales area to 800 square meters by barriers, so that it can at least partially open. Other federal states, such as Lower Saxony, had promised this.

Group struggles for survival

Due to its difficult situation, Galeria Karstadt Kaufhof had applied for self-administered protective shield proceedings in early April. The protective shield procedure is considered the preliminary stage of insolvency, follows the same rules and often leads to a regular insolvency procedure.

It is reserved for companies that are not yet insolvent, but are at risk of bankruptcy. Under the protective shield, they are safe from access by creditors for three months and should therefore have enough time to organize their finances.

As has now become known, the Signa holding company of the Austrian investor René Benko sells 17 properties from the ailing department store chain Galeria Karstadt Kaufhof. The buyers are funds from the financial investor Apollo EPF. According to the Bloomberg news agency, the purchase price is around 700 million euros. That is exactly the same amount that Benko claims to have invested in Galeria as an additional capital injection.

A Signa spokesman declined to comment on Friday. The transaction was already registered for review at the Federal Cartel Office at the end of March, and the competition authorities released the sale on Wednesday this week. Signa has been the sole owner of the troubled department store group Galeria Karstadt Kaufhof and numerous department store properties of the company since June 2019.

More: Return to normality: what the relaxation of the corona rules means for the trade

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Karstadt owner Benko sells 17 properties to funds

Dusseldorf The Signa-Holding des Austrian investor René Benko sells 17 properties from the ailing chain of department stores Galeria Karstadt Kaufhof. The buyers are funds from the financial investor Apollo EPF.

According to the Bloomberg news agency, the purchase price is around 700 million euros. A Signa spokesman declined to comment on Friday. The transaction was already registered with the Federal Cartel Office for review at the end of March. The competition keepers have released the sale.

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Moody’s warns – bondholders face high defaults

Dusseldorf The risk for international bond creditors caused by Corona is given a house number for the first time: corporate bonds totaling more than $ 174 billion, the rating agency Moody’s announced on Wednesday, are currently among the financial stocks threatened by the epidemic.

This figure corresponds to the outstanding bonds of those 25 percent of the large companies rated speculatively (“non-investment grade”) by Moody’s that have lost a large part of their current income due to official orders: above all the non-food retail trade, followed by the Car industry to the leisure and catering trade.

The energy sector is also indirectly affected, which represents a further 2.4 percent of the group bonds issued worldwide. The oil price shock is throwing business on them these days.

“We will also see a contagion effect in other industries,” warns Moody’s manager Jeanine Arnold. Business service providers, chemical companies and raw material suppliers are exposed to high risks as suppliers.

Even the telecommunications sector, which is hardly affected by the corona crisis at the moment, could be affected at different times. There is usually a correlation between sales development and gross national product, observes Moody’s. With the “unprecedented shock” for the economy of the G20 countries, it is expected there, telecommunications revenues will shrink – but with a delay of one year.

Investors have suspected that the biggest failures from the non-food retail sector are to be feared, not only since the protective shield procedures for the Esprit fashion retailer and the Essen-based department store group Karstadt Kaufhof. A look at the latest reports from the rating agency Standard & Poor’s confirm the concern.

In the past two weeks alone, she has classified industry giants such as Fossil, Levi Strauss, the US department store Neiman Marcus and the British fashion retailer in this sector Matalan down – all now with a non-investment grade. S&P even certified the last two with an “CCC” rating, an acute risk of late payment. Even the hotel chains Hilton and Wyndham, which also got a speculative “BB” thanks to Corona at Easter, are still stable in comparison.

Rapid descent

For bond artists, the situation has escalated at an immense pace. Among the speculative European bonds – that is, from a rating of “Ba1” downwards – there will be a default of 7.8 percent by the end of the year, Moody’s expects. By March 2021, it could even be eight percent. In the twelve months to March 2020, however, the default rate was just 1.7 percent.

Between early March 2020 and April 9, 22 percent of all companies rated by Moody’s as “speculative” received a devaluation. Companies from retail and the automotive industry in particular were often down several levels.

“In addition, the corona crisis will significantly widen the gap between relatively financially strong and financially weak companies,” warns Moody’s manager Arnold. For example, issuers classified as moderately speculative (“Ba”) only had three devaluations between the beginning of March and April 9 that made up more than one meter, while the poorer credit ratings (“B” and below) gave 33.

Speculative issuers tend to have weaker market positions, are more geographically defined and focus on fewer customers and suppliers, Moody’s explains. In some cases, they would have a higher fixed cost share, which limits operational flexibility. This makes it difficult for them to react to the suddenly and unforeseen restrictions.

Investment grade companies, on the other hand, would typically have better access to sources of finance, often to equity. In addition, there would often be levers to limit the outflow of funds – for example through dividend cuts or the provision of investments.

Such conditions currently count not least for government aid programs. In Britain, for example, the government has made the CCFF program explicitly available to investment grade companies. In other countries, including Germany, the banks have to guarantee part of the government loans. Moody’s believe that this limits the prospects for companies that were considered “speculative” even before the corona crisis. The tour operator Tuiwho received a EUR 1.8 billion KfW loan is an exception here.

More: With Daimler, BMW and ford It hit the first: The corona crisis is causing rating agencies to downgrade car companies. It can go further down.

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Corona speeds up the death of inner cities

Dusseldorf Mark Rauschen is concerned. “Around six million visitors come to our fashion and sports house every year,” says the managing partner of L&T in Osnabrück.

But the attraction in the city of Osnabrück is closed because of the corona crisis. “It is currently spooky in the city center,” Rauschen describes the consequences of the state-prescribed shutdown for the city in northern Germany.

It could look similar in many German cities after the end of the corona crisis. Because experts assume that many retailers will not be able to cope with the week-long closure of their shops.

In addition, since many restaurateurs are threatened with the end, there is a risk that the vacancy rate in many city centers will accelerate and that they will become less attractive. The bitter consequence: fewer visitors come to the centers.

“In order to maintain the attractiveness of city centers, a functioning fashion trade is very important,” says Klaus Harnack, partner of the management consultancy Hachmeister + Partner. “This also benefits other sectors that are important for the vitality of cities, such as gastronomy,” emphasizes the consultant.

Bankruptcy wave is expected

But this colorful mix of fashion and other shops and restaurants could change dramatically in the next few months. “At the end of the year at the latest, there will be an unprecedented wave of retail bankruptcies,” says Harnack. He worries that about a third of the companies will not survive the consequences of the corona crisis.

For years, fewer and fewer people have been coming to the cities to shop. In the past five years alone, the number of stores in German retail has declined by around 29,000, according to the Handelsverband Deutschland (HDE).

“Every fifth company in Germany could go bankrupt”

This is due to the growing online business, but also to the fact that the inner cities are becoming more and more the same, because the same chain stores are everywhere esprit about HM to Zara shape the picture – and give up smaller retailers.

In addition, even large corporations such as Galeria Karstadt Kaufhof are at risk. Germany’s largest department store group recently registered a protective shield procedure. The retail giant wants to protect itself from creditors’ claims in the corona crisis.

Difficult times for landlords

This not only affects the big German cities. “The smaller the locations, the more difficult it becomes,” says Eckhard Brockhoff. The entrepreneur from Essen sees himself as the largest regional commercial broker in Germany. Many medium-sized towns had already struggled in recent years. But now the situation is even more explosive.

The broker sees hard times especially for some landlords. Some will lose their tenants because they have to file for bankruptcy. Others are trying to suspend the rent in the coming months with reference to the corona crisis. It may well be that many retail chains wanted to permanently lower their rents afterwards, says Brockhoff.

In the past few years, retailing in city centers had been increasingly replaced by restaurants and takeaways. “Food is the new shopping” is the motto of many neighborhood developers, observes Michael Lidl, partner of the hotel and catering consultancy Treugast.

However, Corona could also partially break off urban catering. The risk of the gastronomic landscape becoming deserted already existed before the crisis. But “such a process is accelerated by the corona crisis,” says Lidl.

Hermann Weiffenbach, the founder of the Enchilada Group from Munich, agrees with this opinion. The entrepreneur and franchisor for around 90 restaurants nationwide fears: “We will experience an insolvency wave in the catering trade. It will hit the small restaurateurs in particular, who generally have no reserves. ”

Fashion brands fear for retailers

International chains could last longer financially. A variety of restaurants, ice cream parlors and cafés are just as important for lively city centers as a wide range of retail outlets.

In order to prevent the store from dying, many companies in the fashion industry have now joined forces. This includes Mark Bezner from the shirt manufacturer Olymp as well as the bosses of the men’s fashion brand Brax and Michael Hirmer, managing partner of the Munich textile house of the same name.

“The overriding goal is to maintain vital inner cities in Germany with an almost unique mix of retail, catering and cultural institutions,” write the authors of a thesis paper, which also includes large associations such as the Federal Association of German Textile Retailers.

Given the expected losses this year and next, loans would not be enough to avert an unprecedented wave of bankruptcies. Retailers and manufacturers would be hit existentially and there would be a devastating domino effect. So it is about the preservation of 440,000 jobs in retail alone with clothing, sports articles, shoes and leather goods.

Austria as a role model

The fashion companies are demanding compensation for the pecuniary damage they suffered as a result of the closure of the shops due to the corona crisis. They refer to the Austrian model.

There, for example, initially granted loans can be converted into grants. In addition, grants can be paid regardless of previously granted loans.

Because according to calculations by Hachmeister + Partner, it can be assumed that the retail sector will only slowly recover after the stores have opened. Depending on the scenario, the drop in sales in May will be up to 50 percent compared to the previous year.

Handelsblatt Morning Briefing - Corona Spezial

A drop of 40 to 50 and 30 to 40 percent is also expected in June and July. Therefore, the dealers could hardly pay rent, personnel and energy costs.

Above all, companies have to prepare for the reopening of the stores. “We are preparing to prepare enough disinfectants, masks and plexiglass panes to protect against spills at the cash registers,” explains Mark Rauschen, head of L&T in Osnabrück, about the huge changes that the corona epidemic will bring to the retail trade.

“We will not experience the ease of shopping in the past,” feared Rauschen. It will take some time before as many visitors as before the crisis will make a pilgrimage to the house with the surf pool.

More: More and more chain stores no longer pay rent.

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The fashion industry is breaking the middle

Times are difficult for the entire German economy. And it is also understandable that everyone who can apply for government aid to survive the corona crisis. This applies in particular to the German fashion industry. Companies of Gerry weber via Bogner to Boss suffer particularly from the fact that all shops in Europe are closed.

The fashion industry is one of the big losers in the pandemic. Because if you no longer drive to the office, visit theaters, restaurants or go on vacation, you don’t feel like buying a new outfit – not even in the online shop. In the home office, part of the full wardrobe is enough, especially if you switch off the video function during the conference call.

The state-prescribed shutdown is bitter for the fashion companies. There is currently little hope that anything will change so quickly. Because the willingness to buy should hardly increase in the coming months. It can be expected that when life returns to normal, people will spend money on a lot, but not on new clothes. Short-time work or unemployment of hundreds of thousands put a considerable strain on the household budget.

However, the corona crisis is likely to be particularly difficult for some fashion companies: These are the companies from the middle of the fashion market. It meets well-known names like Gerry Weber, esprit and Tom Tailor or S.Oliver. All companies that offer mid-price t-shirts, dresses and trousers. In the past few years, they have failed to develop strategies to defend themselves against the brutal change in the fashion market.

Because they are attacked from two sides: from below by discounters like Primark, Kik and the grocery discounters Aldi and Lidl – and from above by premium and luxury brands like Marc O’Polo, Tommy Hilfiger and Gucci. A dangerous grip.

The trend to expensive or cheap in the fashion industry has been going on for some time. The discount and premium and luxury segments have been growing fastest for years. This trend is likely to be exacerbated by the corona pandemic. Either people spend as little money on clothing as possible, or they are willing to have their skirt and trousers cost significantly more. But they also demand more value for it: higher quality, perfect service, a better brand image.

Large retailers also under pressure

All providers who move between the two extremes have a hard time and lose market share. Many fashion companies are therefore trying to escape and try to upgrade their image and collection. However, this is expensive and takes a lot of time, as the example of Esprit shows. The company has been undergoing permanent renovation for years and has tried several times to improve its image with large advertising campaigns – with little success. A few days ago, Esprit had to register for self-administration.

For brands from the middle of the market, the situation is becoming more acute because important sales channels are also struggling with problems: what happens when the large operators of department stores such as Karstadt Kaufhof or Peek & Cloppenburg close branches after the corona crisis or downsize?

Because the big retailers themselves are under massive pressure to change their business concept in order to survive. It is no longer enough to set up a coffee bar, a mobile phone charging station or a cozy corner for the little ones to lure online customers back to their shops.

The buying experience must be in the foreground

They only come when retailers score with personal service, a selected collection that is not available on every corner and an intelligent combination of online and offline shopping. Above all, they must succeed in making their business a real meeting place, where it is not just a matter of selling jackets, handbags or sneakers.

The buying experience must be in the foreground, as Breuninger or the Kadewe Group demonstrate. The motto also applies in retail: he has to choose between expensive or cheap.
The fashion industry must not go any further when it comes to sustainability. It is not enough to compete with each other with new seals for green fashion. Instead of throwing more and more organic cotton onto the market, for example, it makes more sense to improve the quality of the collections – according to the motto: less is more.

That would also be an opportunity to reduce the discount madness in the industry to a healthy level. This would even help some fashion companies from the middle of the market to survive in the post-Corona era with new concepts.

More: After Adidas and Deichmann, other companies announce that they will pay less or no rent.

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The corona crisis is causing German traders to exist

Düsseldorf, Frankfurt The drama speaks practically from every word. “The corona crisis and the associated official closings are an existential threat for retailers in Germany,” warns the management of Galeria Karstadt Kaufhof in an internal letter that is available to the Handelsblatt.

Covid-19 also means “a very, very big challenge” for the own company and the approximately 28,000 jobs associated with it. Every week Galeria Karstadt Kaufhof loses “more than 80 million euros in sales”.

A letter that the managing directors of Kik, Tedi, Takko, Woolworth and Roller wrote to Federal Minister of Economics Peter Altmaier a week ago sounds no less threatening. “As a result of the dramatic changes in the political environment, our economic existence will soon be at stake, and with it several million jobs in Germany,” says the joint letter.

Traders complain that the industry is currently the center of attention again. The trade, and above all the non-food trade, was “neglected and without sufficient expertise”.

Because numerous retailers in Germany have had to close their branch network, there is an alarming mood in the industry. Because a large part of the trade relies on the stationary business, e-commerce usually only makes up a small part of the turnover.

The online share in German retail across all product categories is just eleven percent. For many retailers, this means that most of the sales are lost due to the corona crisis.

This puts the business model in distress for some. Since many costs continue to run, but there is no revenue, there is a lack of liquidity, for example to pay the claims of suppliers.

A frequently used model is to agree payment terms of around three months with suppliers. The dealer can then pay the bills from the sales in normal times.

Euler Hermes responded

But times are no longer normal. That’s why many retailers are now negotiating with their suppliers to extend payment terms. The main commercial credit insurer, Euler Hermes, has already responded to facilitate these negotiations.

This means that customers can extend the payment terms with their suppliers by up to 60 days until the end of May – without having to consult Euler Hermes again.

graphic

In order to survive in the increasingly acute situation, the dealers also grab every straw. Short-time work has already been applied for practically across the board in order to reduce personnel costs. Investments are largely reduced, rental payments are held back.

However, it is already becoming clear that ultimately all of this might not be enough. That is why more and more large retailers are applying for government aid in the form of a loan from the KfW state bank.

KfW assumes up to 80 percent of the risk for large companies with sales of 50 million euros or more, and up to 90 percent for smaller companies. The rest of the risk must be taken over by the respective house banks.

The dealer Ceconomy With its chains Media Markt and Saturn, for example, 20,000 employees in Germany have already sent short-time work and checked every means to protect liquidity. “However, it is currently completely unclear how long the phase will take before our normal business operations will resume,” said a Ceconomy spokeswoman.

“That’s why we decided to apply for additional KfW financing.” We are talking about a possible loan of around two billion euros. Ceconomy has neither confirmed nor denied the sum. In corporate circles, however, it is said that this is a financing framework that does not have to be fully exploited.

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Stress test for companies: The corona shock: How well equipped are German companies?

Providing liquidity is becoming the most important factor in the crisis. The Handelsblatt looks at the balance sheets of 120 companies. .