In Germany, KaDeWe Group initiates insolvency proceedings

Last week, the rumours were already flying. It’s now official: the KaDeWe Group has filed for bankruptcy. As recently as the end of November, CEO Michael Peterseim ruled out any chance that Signa Group (owner of KaDeWe) would file for bankruptcy. The only reason given was that rental costs were too high. The luxury retailer claims that its business is profitable “before rent”, referring to the previous financial year. The 2022/23 financial year generated the highest sales in the company’s history.

At nearly €728 million, revenues were almost 24% higher than in 2018/19, the year before the Covid crisis. The extremley high rent for the Berlin (KaDeWe), Hamburg (Alsterhaus) and Munich (Oberpollinger) sites are making it almost impossible for them to be profitable over the long term, the group said.

As a result, rents are reported to have risen by almost 37% compared to the 2018/19 financial year, and they are expected to rise further over the next few years. Against this backdrop, the management was forced to file for insolvency proceedings under its own management with the Berlin Charlottenburg District Court.

This application has already been accepted. Christian Graf Brockdorff of BBL Brockdorff Rechtsanwaltsgesellschaft mbH has been appointed provisional administrator. The management of the KaDeWe Group is supported by the Finkenhof law firm, headed by Stephan Strumpf in his capacity as general trustee.

The aim now is to protect the business: “We are leaving behind the charges inherited from the past and, above all, getting rid of the high rental charges for our establishments. Operationally, we are doing a remarkable job. All of our properties are reporting rising sales, even in difficult economic times, which is quite an achievement. However, the index-linked rents are disproportionate, not in line with the market – and will continue to rise. Numerous discussions with the landlord have done nothing to change this, and neither have Signa’s bankruptcies, unfortunately,” says CEO Michael Peterseim, who has just taken up his post.

Provisional administrator Christian Graf Brockdorff commented: “The KaDeWe Group is very well positioned operationally. The three houses occupy exceptional positions and are iconic city centre locations. I am very confident that, together with the management team, we will succeed in ensuring the continuity of the group.”

The current management team around Michael Peterseim will remain in place and continue to run the business. The three department stores will of course remain open, and operations will continue unchanged. For all employees under contract, the payment of salaries, including any bonuses, is guaranteed at their current level by the Federal Employment Agency’s insolvency compensation.

“There is no doubt that the group can have a bright future with reasonable rents. All the properties are iconic landmarks in their cities and in the luxury sector. They occupy a unique place in the market. The restructuring therefore represents a great opportunity to set the company on the road to success for many years to come,” concludes Michael Peterseim.