German retail giant KarstadtQuelle to axe 180 stores

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The Independent Online

Karstadtquelle, the German department store and mail order giant, announced plans to sell off or close more than half its 180 retail outlets yesterday under a radical overhaul designed to prevent the loss-making business from collapse.

Karstadtquelle, the German department store and mail order giant, announced plans to sell off or close more than half its 180 retail outlets yesterday under a radical overhaul designed to prevent the loss-making business from collapse.

Announcing the plan to sell off 77 of the company's outlets and close a further 15 stores "as soon as possible", Christoph Achenbach, KarstadtQuelle's chairman, said: "The economic situation has forced us to make the deepest cuts Karstadt has had to undertake."

The move reflected KarstadtQuelle's deepening financial crisis. Company profits were down 8.7 per cent on last year's figures during the third quarter of 2004 with overall profits for the first nine months of this year down 6.7 per cent.

The middle-market retail group has been blamed for failing to modernise its stores to meet clearly defined customer needs. Its competitors, C&A and Kaufhof, have plugged the gap by targeting the lower and upper ends of the retail market. "KarstadtQuelle will have to come up with a new concept," Juergen Maximow, a market analyst, said. "The classic department store is a dinosaur which has no hope of survival."

Under the programme, KarstadtQuelle will sell off its subsidiary retail outlets, SinnLeffers, Wehmeyer, Runners Point and Golf House, in an attempt to raise a projected €1.1bn in capital. Its department stores in small provincial towns are expected to be the chief targets for closure. The company said it plans to reorganise its huge mail order division.

The overhaul also includes pay cuts and longer working hours for staff but the KarstadtQuelle board said it was too early to predict whether there would be major job losses.

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