German department store Galeria Karstadt Kaufhof has applied for creditor protection due to the COVID-19 outbreak.
The company’s filing was accepted by German city Essen’s District Court.
On March 18, the department store closed all locations in line with orders from German authorities. The company has lost some €80m in sales each week since the closures.
By the end of April, Galeria Karstadt Kaufhof’s sales loss will amount to €500m.
The chain’s owner Signa has already invested €500m in the realignment of its inner-city department stores. Signa transferred an additional €140m this week to support the company.
Karstadt group cfo Miguel Müllenbach said for the current financial year the company expects an EBITDA of €100m, and the goal of the creditor protection is to cope with store closures while maintaining its goal and avoiding massive debt increases.
Karstadt group cfo Miguel Müllenbach: “From the first day of the shutdown, we made every effort to get the promised government aid. We very much appreciate the political commitments for companies in this historic crisis. They are indispensable. However, commercial banks benefit from the implementation of the state guarantees. This process is very bureaucratic, costs valuable time, is associated with additional hurdles – and therefore has an uncertain outcome. This was shown by the discussions with our longstanding house bank. However, we cannot wait for another week of the crisis for a solution, but have to act now.”