“Can guarantee returns”
Works council sees future for Galeria department store chain
January 7, 2024, 5:50 p.m
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The Signa Group’s crisis is also causing difficulties for the Galeria department store chain. Preparations for insolvency proceedings are underway. A new owner is needed, says works councilor Ettl – who ties the future of the company to several conditions.
The works council of Galeria Karstadt Kaufhof considers the department store chain to be viable for the future despite the turbulence at parent company Signa. “The fact that the core companies of the Signa Group are now insolvent means that we can free ourselves from the Signa Group and its interests,” said works council leader Jürgen Ettl to “Wirtschaftswoche”. If a new owner is found who “has an interest in Galeria doing well, just as we do, the company will be viable for the future.”
According to Ettl, Galeria can offer a single investor or consortium a return of between 6 and 17 percent. “We can guarantee 3 percent in bad times and at least 6 percent in good times.” To do this, among other things, the rents at the Signa locations would have to be reduced to a market level. Further job cuts at the Essen company headquarters can hardly be avoided. “It’s hard for me as a works council,” said Ettl. “I would like to keep every job. But in our situation there shouldn’t be any prohibitions on thinking, even for works councils.”
The company network of the Austrian real estate billionaire René Benko, which also includes Galeria, is faltering due to increased interest rates, construction costs and energy prices. Several parts of the group are insolvent.
However, Galeria was not a growth case in the Signa Group even before the bankruptcies. In retrospect, Ettl sees a mixture of his own fault and that of others responsible for this. “We have certainly run the company with a certain arrogance for a long time, based on the motto that the customer will buy what we put in front of them.” However, internal power games resulted in measures not being implemented. “Giving more power to one person is not possible without taking something away from another. You first have to want to fight.”
In previous rounds of restructuring, the main focus was always on costs. “If sales fell, the staff in the branches was reduced instead of considering whether more staff would make more sense,” says Ettl. But that has recently changed. “We thought about how things could go up, not just how we could stop the decline.”
Galeria belongs to the extensive Signa empire of the Tyrolean real estate investor Rene Benko, whose core companies and the parent company Signa Holding have filed for bankruptcy. This has consequences for Galeria. Among other things, Signa Holding had committed to providing Galeria with an amount of 200 million euros. It is questionable whether the money will flow. Galeria is part of the Signa Group via Signa Retail Selection, based in Switzerland. The company had applied for protection from creditors and wanted to “orderly liquidate” parts of the company.