KaDeWe Group, which operates some of Germany's most famous department stores, has filed for voluntary insolvency.
Rising rents and the collapse of its co-owner Signa Holding – which recently filed for insolvency – have been cited as key reasons for the move.
The retail group owns the eponymous Berlin-based Kaufhaus Des Westens (KaDeWe), Oberpollinger in Munich and Alsterhaus in Hamburg.
These stores are co-owned by Thai multinational conglomerate Central Group, which owns a 50.1% stake, and troubled property giant Signa Holding.
KaDeWe Group has filed proceedings for self-administration with the Berlin Charlottenburg District Court in a bid to uncouple from the high rents it has to pay.
A company statement said rent had risen 37% since the start of the Covid-19 pandemic and made it “almost impossible to operate profitably in the long term”.
However, it added that the business was “clearly profitable” before rents were taken into account.
KaDeWe Group brought in sales of nearly €728m for fiscal year 2022 to 2023 – the highest in its history.
Signa is the owner of the KaDeWe building in Berlin, which it leases back to the department store.
The KaDeWe Group pays rent to a unit of Signa’s organisation, which handles its stakes in the operating company and its underlying property separately.
Michael Peterseim, CEO of KaDeWe, added: "There is no question that the group can have a strong future with normal rents.”
The store is now in the hands of “preliminary custodian” Christian Graf Brockdorff, while management is being supported by law firm Finkenhof.
Peterseim said the aim is to protect the future of the group.
“We are leaving old burdens behind us and, above all, liberating our stores from high rental burdens,” he said.
“Operationally, we are doing an outstanding job.
“All stores are recording rising sales even in difficult economic times, which is a strong performance.
“However, the index-linked rents are disproportionately high, they are not in line with the market – and are set to rise further.
“Numerous discussions with the landlord have not changed this, nor, unfortunately, have the insolvencies at Signa.”
KaDeWe Group employs around 900 people and said all three department stores will remain open and operations will continue unchanged.
Peterseim said the group can have a strong future once rents are renegotiated.
He added that filing for administration was “a great opportunity to successfully align the company for many years to come.”
Image credit: Wikimedia Commons/Author: Jochen Teufel.
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