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Karstadt Supervisory Board resolves to close five stores and discusses the comprehensive concept for the future

At its extraordinary meeting on 12 May 2015, the Supervisory Board of Karstadt Warenhaus GmbH resolved to close five locations: Recklinghausen, Bottrop, Dessau, Neumünster and Mönchengladbach-Rheydt. Not only has the sales and earnings performance of these loca-tions been negative for years and thereby detrimental to the recovery of the company as a whole and all the other stores, but these locations also have no prospects for the future, de-spite all efforts of the past few months, due in particular to considerable local disadvantages and structural conditions at those locations.

The most serious disadvantages include increasing competitive pressure from shopping cen-tres, some of them located in city centres, and the declines in population and/or purchasing power in the cities. In most cases, there are no initiatives on the part of the city authorities or business development companies to improve city centre retail, making a sustainable turna-round impossible.

Wolfram Keil, Chairman of the Supervisory Board of Karstadt Warenhaus GmbH, explains: “It was not an easy decision to close five locations as part of the redevelopment that is ur-gently required. For some time, the management has been pointing out the negative effects that approvals for city centre shopping centres and a lack of initiatives to boost city centre retail can have on the Karstadt locations and, in recent months, it has tried everything to de-vise long-term development prospects for these locations.”

The individual stores are scheduled to close on the following dates: Recklinghausen, 30 June 2016; Bottrop, 31 March 2016; Dessau, 31 March 2016; Neumünster, 30 June 2016, and Mönchengladbach-Rheydt, 30 June 2016. The provisions of the redundancy package agreed with the General Works Council back in February 2015 and the collective redundan-cy package agreed with ver.di in March 2015 will apply to the employees affected by the closures.

The concept for the redevelopment of Karstadt presented to the Supervisory Board in au-tumn 2014 consists of three pillars: earnings increases, measures to sustainably reduce staff and non-staff operating costs, and structural measures to improve the profitability of the store portfolio.
Karstadt CEO Dr Stephan Fanderl comments: “We are in the midst of a process of funda-mental and comprehensive transformation and are on a good track. The redevelopment and the concept for the future depend on each other. The redevelopment has demanded a lot of us so far. Without these decisions, some of which are very painful, such as the closure of stores without strategic prospects, we cannot secure the recovery of the company as a whole. At the same time, all efforts must be geared towards quickly becoming operationally better and to improving branch profitability.”