German department store Galeria Karstadt Kaufhof to close 52 branches, 4,000 jobs at risk

The iconic German department store chain Galeria Karstadt Kaufhof, will close down 52 of its 129 stores, as announced on Monday by the group, which has been struggling financially for several years.

“After intense negotiations with lessors and city authorities, there is no prospect of continuing to stay open for business," said the group in a press release, referring to 52 of its stores across Germany.

Around 4,000 jobs are at risk because of these closures, as well as 300 employees working at the group’s headquarters in Essen, North Rhine-Westphalia, and in its IT department.

These employees “will be offered the chance to join another company,” said Galeria, which entered a protection procedure in November 2022. A first wave of closures will take place on June 30, followed by another on January 31, 2024.

“It's a dark day for Galeria people,” said the Ver.di (united services) trade union in a statement, calling for “urgent” change in the group’s top management, who have left “employees to foot the bill.”

The cash-starved chain, a counterpart of groups like Galeries Lafayette in France, is also planning to “thoroughly modernise” its remaining 77 stores over the next three years, in order to make them “a popular city-centre meeting point.”

Galeria Karstadt Kaufhof is over a century old, and has been beset by financial difficulties for several years. A result of the pandemic’s impact combined with the waning appetite of German consumers for this kind of outdated generalist store, all but supplanted by multi-brand shopping malls and e-tail giants.

Galeria is now keen to offer “attractive catering options (...) tailoring ateliers, dry cleaning and other services for the general public.” The branches will become more connected, independent and focused on local and regional needs, said the group.

“Department stores have a future in Germany,” said CEO Miguel Müllenbach, at a time of intense competition by e-tail giants like Amazon.

Galeria Karstadt Kaufhof was also hit by rising inflation fuelled by the Russian invasion in Ukraine. The group first filed for bankruptcy in 2020, resulting in the closure of 40 stores and the loss of 4,000 jobs.