Karstadt closures
November 10, 2009
Weidmann, who is handling the insolvency proceedings for Arcandor subsidiary Karstadt, announced that six of the company's 126 department stores will have to close their doors by the end of the year. The affected stores are located in Berlin, Braunschweig, Dortmund, Hamburg, Munich and Stuttgart, DPA reported. A further 11 locations would continue to be closely monitored, and their fate decided in mid-December.
In an interview with Deutschlandradio, the deputy head of the Verdi service sector union, Margret Moenig-Raane, said Verdi would advocate that the surviving stores absorb the workforce of around 400 employees from the six stores that are to be closed.
"Best solution for everyone involved"
At Tuesday's meeting of Karstadt creditors in Essen, Arcandor insolvency administrator Klaus Hubert Goerg appealed to creditors to keep Karstadt alive, and said that a restructured company would be "the best solution for everyone involved." He stressed that a restructuring would require individuals to make significant sacrifices.
Over the weekend, Goerg secured a deal with workers' representatives under which Karstadt employees would forego 150 million euros ($224 million) in pay to save their jobs.
German newspapers reported that employees would forfeit about 75 percent of their vacation pay and annual bonus. The cost-cutting plan is being scrutinized by the creditors gathered in Essen.
Boost expected from Christmas sales
Goerg described Karstadt's liquidity status as positive. Based on current turnover and liquidity plans, he said Karstadt would have a continued stable financial basis.
Retail analysts are also predicting that the a spike in turnover from the coming Christmas season could prove to be especially significant for the company.
"Turnover at the moment is looking good, and there is a bit of better picture now overall in the runup to the Christmas season," Postbank retail analyst Ascan Irede told Deutsche Welle.
Goerg has already declared Arcandor's mail-order subsidiary, Quelle, bankrupt. The parent company filed for bankruptcy protection in June.
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Editor: Jennifer Abramsohn