Gerry Weber International AG has to reorganize itself and restructure the German retail business. The company only ended its last insolvency proceedings three years ago
The clothing supplier from Halle in Westphalia wants to reposition itself with various measures, Gerry Weber announced on Wednesday. The reasons for the renovation are the closures of the stores in Germany due to Corona and the changed behavior of customers, which was triggered by the Ukraine war and high inflation, among other things.
For the financial restructuring process, the company applied for the initiation of proceedings at the responsible district court in Essen on April 19 on the basis of the law on the stabilization and restructuring framework for companies (StaRUG). This is intended to achieve a “sustainable balance sheet restructuring on the liabilities side”, according to Gerry Weber. The aim is to reduce the company’s level of debt by balancing financing partners and shareholders in such a way that Gerry Weber “can survive on the market as a healthy company,” explains a spokeswoman at FashionUnited’s request.
A complete capital cut is to be carried out, with which “the stock exchange listing of Gerry Weber International AG would also expire”. This means that the shares of Gerry Weber International AG are no longer traded, according to Halle in Westafalen.
“By initiating a preventive StaRUG procedure, we want to reorganize our liabilities side. At the same time, we will operationally restructure our German retail business as part of a self-administration process and thus make the company future-proof and more resilient,” says Florian Frank, Chief Financial Officer of Gerry Weber International AG. “The wholesale business, e-commerce and foreign business are not affected by the measures.”
Self-administration at German retail subsidiary
As a further measure, insolvency proceedings under self-administration were applied for at Gerry Weber Retail GmbH, the German retail subsidiary of the clothing group, at the competent district court in Bielefeld. The process, which is limited to three months, affects neither the AG nor other Gerry Weber subsidiaries.
The retail business must be realigned, explains CEO Angelika Schindler-Obenhaus. The branch network, which currently includes 149 shops and 28 outlets, is to be adjusted and the size of the sales areas checked. It is clear to the company that there will be closures, according to a spokeswoman. At the moment, Gerry Weber cannot say how many and which locations are involved. This will be checked in the coming weeks.
“With these measures we want to focus on the healthy core of Gerry Weber and further strengthen the successful wholesale, e-commerce and international business,” says the Gerry Weber Managing Director.
It’s not the first time that the clothing retailer has had to restructure itself. Already at the beginning of 2019, after failed talks with banks and creditors, Gerry Weber had to agree on further financing filing for bankruptcy. The procedure was then opened in April. In February of the same year then also the German retail subsidiarywhich is now again insolvent, filed for bankruptcy in self-administration.
But after the conclusion of the bankruptcy proceedings, Gerry Weber struggled with lockdowns and the consequences of the pandemic. While a profit of 23 million euros was still posted in 2021, the company slipped back into the red in the following year. In the first nine months of the past fiscal year, it reported a loss of 10.2 million euros. In the fashion company’s own retail business, sales recovered, but earnings before interest, taxes, depreciation and amortization remained at minus 7.9 million euros.
However, it could be a while before Gerry Weber announces the annual and consolidated financial statements for the 2022 financial year. According to the spokeswoman, this should not be published on April 28th as announced, but only after the implementation of the restructuring concept.
Gerry Weber appoints general representative
As part of the realignment, Gerry Weber is also bringing Dirk Reichert into the management team as chief representative. As Chief Restructuring Officer, the native of Düsseldorf should bring with him his many years of experience as the owner of a consulting company. Most recently, he was a member of the board and co-shareholder of the holding company Munich Brand Hub AG, which specializes in investments in the fashion sector.
“Due to his wide range of activities, Dirk Reichert is ideally suited for the implementation of future-proof measures in the operational area for Gerry Weber,” says Schindler-Obenhaus. “We are certain that in this constellation we are optimally positioned in terms of personnel to meet the current challenges of the market.”
This post was updated on April 20, 2023 at 09:35 with further details by Gerry Weber.