Insolvency Filing Leads to Major Downsizing and Job Losses

Germany’s last major department store chain, Galeria Karstadt Kaufhof, is set to close two-fifths of its branches, following a recent insolvency protection filing for the second time in less than three years. The company’s employee council announced on Monday that the chain plans to shut 52 of its 129 stores, resulting in the loss of over 5,000 jobs, according to the German news agency dpa.

The company, formed from the merger of rivals Karstadt and Kaufhof, cited soaring energy prices and declining consumer spending as key factors leading to its financial difficulties. In late October, it sought protection from creditors amidst these ongoing challenges.

Previously, during the first lockdown of the coronavirus pandemic in April 2020, Galeria Karstadt Kaufhof closed around 40 stores and cut approximately 4,000 jobs. At that time, it received around 680 million euros ($724 million) in state aid to help stabilize its operations.

The planned closures are part of a broader trend affecting department stores in Germany, as they struggle to adapt to changing consumer habits and economic pressures.