The department store operator Galeria Karstadt Kaufhof GmbH is once again in financial difficulties. A few days ago, according to press reports, the company applied for state aid again, shortly before it had terminated its collective restructuring agreement. Concrete results for the 2021/22 financial year, which ended at the end of September, are not yet available, but according to the annual report for the previous year published in the Federal Gazette on Monday, the retailer is likely to have written deep red numbers again.
In the 2020/21 financial year, which ended on September 30 of last year, the group generated sales totaling EUR 2.11 billion, which means a decrease of 39 percent compared to the previous year. Pure retail sales shrank by 38 percent to 1.85 billion euros. The company admitted that sales development was “massively impaired” by the effects of the Covid 19 pandemic and remained “well below expectations”.
The retailer slipped deep into the red: the annual deficit amounted to 622.6 million euros. For the 2021/22 financial year, at the time the report was completed on February 21, the management was expecting a “significant increase in sales” due to fewer pandemic-related restrictions, but also further high losses: “A negative EBITDA and a net loss for the year in the low to medium range are expected hundreds of millions and a corresponding impact on equity,” the group explained.
At the time, however, the additional burdens caused by the effects of the Russian attack on Ukraine and the rapidly increasing energy prices were not yet foreseeable. According to a report by the German Press Agency (dpa) a few days ago, CEO Miguel Müllenbach admitted in a letter to employees that these factors had “thrown back the company in its initially promising restructuring efforts”. The retailer, which is in the process of implementing its “Galeria 2.0” reform program, is now “again in a threatening situation,” the agency quoted from the letter from the CEO.