KaDeWe Group, a leading luxury retailer in Germany, has officially filed for insolvency proceedings due to its financial difficulties. The decision comes after rumors about the company’s financial troubles circulated last week. Despite the denial of any possibility of bankruptcy by KaDeWe Group, it now cites high rental costs as the main reason for its financial struggles.

In the 2022/23 financial year, the group experienced strong sales, reaching nearly €728 million. However, the exorbitant rent for its locations in Berlin (KaDeWe), Hamburg (Alsterhaus), and Munich (Oberpollinger) has made it challenging to achieve long-term profitability. The rental costs have increased by almost 37% compared to the 2018/19 financial year and are projected to continue rising.

In response to these challenges, the management has sought insolvency proceedings under their own management, which have been accepted by the Berlin Charlottenburg District Court. Christian Graf Brockdorff of BBL Brockdorff Rechtsanwaltsgesellschaft mbH has been appointed as the provisional administrator, while the Finkenhof law firm, led by Stephan Strumpf, will serve as the general trustee.

The primary goal now is to protect the business and address the high rental charges burdening the company. CEO Michael Peterseim highlights the operational success of KaDeWe Group, with all properties reporting increasing sales even during challenging economic times. However, the index-linked rents have become disproportionate and do not align with market conditions. Despite discussions with the landlord and Signa Group’s previous bankruptcies, the rental issue remains unresolved.

The provisional administrator, Christian Graf Brockdorff, expresses confidence in the operational strength of KaDeWe Group. The three department stores hold prominent positions in their respective cities and are iconic landmarks. The current management team, led by CEO Michael Peterseim, will continue to lead the company and ensure that operations continue without interruption. The three locations will remain open, and employees will receive their salaries, including any bonuses, at their current levels, as guaranteed by the Federal Employment Agency’s insolvency compensation.

Despite the current challenges, CEO Michael Peterseim envisions a bright future for KaDeWe Group with reasonable rents. The company’s properties have a unique position in the luxury sector and are iconic landmarks in their cities. The restructuring process presents an opportunity to pave the way for long-term success. With the support of the management team and the provisional administrator, KaDeWe Group aims to secure the continuity of its operations and establish a solid foundation for the years to come.

Useful links:
1. KaDeWe Official Website
2. Signa Group Official Website