Berlin’s historic KaDeWe department store has filed for voluntary insolvency along with two sister department stores in Munich and Hamburg, the latest tremor in the collapse of Austria’s Signa group.
KaDeWe management said on Monday the move was not due to slack sales – up 24 per cent last year – but because of “exorbitantly high rents”, up 37 per cent since the start of the pandemic.
Austria’s Signa group owns 49.9 per cent of KaDeWe – pronounced ka-day-vey, an abbreviation of department store of the west – but is also the owner outright of the iconic building, which it leases back to the department store.
Berlin retail analysts described the insolvency less as existential and more strategic: a timely move to push for a lower rent at the retailer, which is 50.1 per cent owned by Thailand’s Central Group.
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The Central Group and Signa also co-own Brown Thomas and Arnotts in Ireland, via their ownership of the UK Selfridges department store group.
According to one analysis, KaDeWe was forced to pay 13 per cent of last year’s €728 million turnover in rent to Signa.
“KaDeWe is doing great,” said Nils Busch-Petersen of the Berlin-Brandenburg Traders’ Association. “The insolvency means an effort to get out of contractual relationships that are toxic.”
In the past decade Signa’s disaggregated business model saw it snap up department stores, split off their properties, then lease their buildings back to the companies at high cost. Critics say the model generated billions in cash and boosted Signa’s rapid expansion, but contributed to the insolvency of Signa’s other German department store, Galeria-Karstadt, last month.
Management insisted the insolvency of KaDeWe, as well as Oberpollinger in Munich and Alsterhaus in Hamburg, would have no immediate impact on its 1,700 employees But it will add to the complications faced by Signa’s Vienna-based administrator, Christof Stapf, and Signa’s creditors.
On Monday, Mr Stapf revealed total creditor demands had ballooned to €8.6 billion, up 51 per cent since the group’s original insolvency filing last November. So far Mr Stapf has recognised only €80.3 million worth of creditor demands.
“It is up to the creditors to provide the documents necessary for the proper processing of their claim registrations via the insolvency court,” he said.
Germany’s three-store KaDeWe group is in turn part of the Signa Retail group, which also includes Galeria-Karstadt, Switzerland’s Global stores and the Selfridges Group. The latter operates 18 stores in three countries, including Brown Thomas and Arnotts.
Late last year, the Central Group moved quickly to increase to a majority its holding in the Selfridges Group. Signa is now reportedly trying to liquidate its remaining 40 per cent stake in the Selfridges Group. The Irish department stores insist the Signa turbulence has had no effect on their day-to-day business.
Trading has continued as normal, too, at KaDeWe, which opened in western Berlin in 1907 and is now as much of a tourist attraction in the capital as the Brandenburg Gate.
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