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German department store chain to shut 40% of its outlets

The long-troubled Galeria Karstadt Kaufhof plans to shut 52 of its current 129 stores in two phases

People walk past the entrance to Galeria Kaufhof on Frankfurt's Zeil, Germany, Monday, March 13, 2023.
People walk past the entrance to Galeria Kaufhof on Frankfurt's Zeil, Germany, Monday, March 13, 2023.Sebastian Gollnow (AP)

Germany’s last major department store chain announced Monday that it plans to close two-fifths of its branches, months after it filed for insolvency protection for the second time in less than three years.

The long-troubled Galeria Karstadt Kaufhof plans to shut 52 of its current 129 stores in two phases, with the first closing down at the end of June and the rest at the end of January.

It said that about 4,000 employees at those stores will be affected, and that another 300 jobs will go at its headquarters in Essen and in other areas such as IT and facility management.

The company said that, because of economic circumstances and “local conditions,” and after “intensive negotiations” with landlords and city authorities, there was no positive outlook for the stores that are to be axed.

The remaining 77 stores will be modernized over the next three years with ranges that are more tailored to local needs, with 11,000 jobs being safeguarded, Galeria Karstadt Kaufhof said in a statement.

The company, which resulted from the merger a few years ago of rivals Karstadt and Kaufhof, sought protection from creditors in late October, citing a steep rise in energy prices, high inflation and weak consumer spending.

It had already shut around 40 stores and cut some 4,000 jobs after seeking protection during the first lockdown of the coronavirus pandemic in April 2020, and reportedly was granted 680 million euros ($724 million) in state aid.

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