“There is a finite time for us too”

Dusseldorf “The company must serve people” – this has been the motto of the Deichmann family for decades. Based closely on the Bible and the Protestant ethics of the great sociologist Max Weber, the Essen family has succeeded in combining modern capitalism with a sense of social responsibility.

The result is Europe’s largest shoe retailer, with a turnover of more than six billion euros, which is highly profitable and yet is aimed at people.

Heinrich Deichmann, who has run his father’s company since 1999, is all the more struck by the fact that the sonorous name of the family and the company, like Adidas and H&M, is now being dragged into an unchristian context, which is: Successful companies unilaterally and coolly refuse in the course of Corona crisis agreed rental payments to the detriment of other parties.

Read the full interview here:

Mr. Deichmann, how do you justify the company’s decision to suspend rent payments?
First of all, I have to emphasize that the accusation that Deichmann would refuse to pay rent at the expense of other parties is false. After the state-prescribed closings, we are simply no longer able to fulfill our operational purpose. We are in negotiations with the landlords on how to deal with the deferrals. We want to do this in partnership and will prevent landlords from getting into an emergency.

So you approach every single landlord?
Of course. We also feel responsible for our landlords. And if individual landlords are not able to defer payment, we will continue to pay. Large landlords such as shopping centers and insurance companies are more likely to be able to pay for the deferrals.

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What is the overall situation at Deichmann?
We had to close all 1,500 branches in Germany. From April 6, our employees in Germany will go on short-time work. But there are also failures in all other countries. We have now closed branches in 28 of 30 countries, and we have 600 stores in the United States alone. We are currently missing 96 percent of total sales.

What does that mean for liquidity?
We have the largest incoming goods in spring, the goods for the spring and summer collections have to be paid for. We currently have a cash outflow in the hundreds of millions every month – with almost no income. The biggest problem, however, is that nobody knows when the situation will normalize.

How long are you going to last?
If you are forced to close your business and the costs keep going, the money will inevitably run out at some point. Exactly when this happens depends on how we now manage to adjust and save costs. But there is also a finite time for a healthy company like Deichmann.

Let’s say you can open the shops again on April 20: What does this mean for you?
Then I assume that we can do it well. We’ll be going through this for four weeks. However, we have to expect that customers’ willingness to buy will not increase enormously again.

And if it takes longer?
If we talk about three months or more, it gets serious.

The Deichmann family has become wealthy with the shoe trade. Are you feeling the burden of responsibility as an owner?
Absolutely, I feel a great deal of responsibility for our employees, I will do everything I can to keep the jobs and help employees who cannot make ends meet with the short-time allowance. We have set up a support fund for this. I will take care of it personally.

The biggest problem, however, is that nobody knows when the situation will normalize. Heinrich Deichmann

Will the family step in with their private wealth?
The absolute largest part of our assets lies in the company. Our private wealth is manageable, we have largely left the profits in the company. What comes out is the money for our non-profit foundation and our aid organization.

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But the family is still not completely penniless. How is it compatible with your high ethical and moral standards that family assets remain untouched at first, but that rental payments are suspended?
The assets that would be necessary to save a company with a turnover of 6.4 billion euros and a correspondingly high cost pool, would be in private hands with us.

According to the Federal Gazette in 2018, their equity ratio was 72 percent. Has the equity base now become thinner if you have to cut rents so quickly?
The equity ratio is very high. We are a healthy company.

“The government has managed the crisis very well so far”

What are your first experiences dealing with banks since the beginning of the crisis?
Positive, we started the talks very early, even before the aid programs started. And that’s why we don’t need KfW’s support. We would only deal with it if the crisis went well beyond Easter.

There are voices that say that the family-run middle class has so far been neglected by the newly launched aid programs? Would you agree with that?
Basically, I think the government has managed the crisis very well so far, especially in health policy. But the seriousness of the economic problems is also recognized. You may have to readjust for certain target groups.

Are you not actually benefiting from your online business at the moment?
Sales are growing there, but not as quickly as we would like. However, we are still in the single-digit range, based on our usual total sales.

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How do you personally deal with the crisis?
I worry about our employees first. And the reproach in the discussion about rents that we would enrich ourselves in the crisis hits me deeply.

Mr. Deichmann, thank you very much for the interview.

More: During the crisis, several companies announced that they would not pay the rent for their branch for the time being.


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