After weeks of negotiations, Galeria announced on Thursday that US investment firm Gordon Brothers is providing a credit line of up to 160 million euros. In return, the company must restructure outside of insolvency, which also involves further store closures. How many of the 83 department stores will remain is still unclear – according to dpa information, around 30 locations are considered at risk.
Retail professor Carsten Kortum from Baden-Württemberg Cooperative State University in Heilbronn said the loan eases the existential crisis and gives Galeria a few months of breathing room. However, a large portion of the money will only cover existing obligations, not be invested in the future. Kortum also criticized the owners: “The past and current owners all had their own agendas, but never the company’s best interests in mind.”
Johannes Berentzen from retail consultancy BBE sees a chance if Galeria sharpens its assortment to core categories and increases customer footfall. IFH managing director Boris Hedde expressed doubts: a credit line does not yet constitute a viable business model. The importance of the department store as a shopping destination has declined over decades, compounded by consumer reluctance to spend.
Verdi regional department head Marcel Schäuble called the loan good news for the company’s survival but criticized the lack of a sustainable future concept. Verdi board member Silke Zimmer stated: “For employees, it is an extreme burden to constantly hear and read new rumors about closures and job cuts.” Co-owner Bernd Beetz expressed relief that things can continue but acknowledged the situation remains tense.
Source: www.tagesspiegel.de
