The owners of karstadt and kaufhof have made progress in their talks about a merger of the two department store chains.
The canadian department store owner hudson’s bay company (HBC) and the austrian karstadt owner rene benko signed a declaration of intent on tuesday, as the "wirtschaftswoche" reports.
It envisages bringing kaufhof, karstadt and karstadt sport into a joint venture. This was confirmed to the german press agency on wednesday from negotiating circles.
According to the report in "wirtschaftswoche", the declaration is entitled "agreement on a merger of equals in the european department store business". After that, benko’s company signa was able to get slightly more than half of the shares in the joint venture and run the operating business. The impact of the merger on the employees of the two chains is not yet clear. Administration and purchasing should be merged. The closure of stores in a crude style is not up for debate. Neither HBC nor signa wanted to answer questions about the deal.
Last week it was announced that the owners of the two chains were once again talking about cooperation. Karstadt owner benko has been toying for years with the idea of integrating kaufhof into his department store empire and creating a "deutsche warenhaus AG" by merging the rivals. But his attempts to take over kaufhof had failed time and again in recent years. Only a few months ago, HBC rejected a three-billion-euro offer from the austrian retailer to buy kaufhof and an associated real estate package.
Both department store chains have been suffering for years from the triumph of low-cost retailers such as primark and online retailers such as amazon or zalando. The situation was exacerbated by management errors.
The situation at kaufhof is currently particularly critical. Since its takeover by the canadians at the end of 2015, the colonn-based retail giant has been struggling with a drop in sales and red figures. Kaufhof boss roland neuwald is therefore currently negotiating a restructuring agreement with the verdi trade union, which should reduce the company’s costs by millions of euros.
But even karstadt has only just managed to return to the black after a tough restructuring process. In the past fiscal year, the group reported a modest net profit of 1.4 million euros for the first time in twelve years, with sales continuing to decline slightly.