BERLIN — As part of a radical restructuring plan to improve cash flow and earnings, Arcandor AG, the struggling department store, catalogue and travel group, is spinning off its premium department store operations and a large portion of its catalogue business into a separate company called Atrys.
The new firm will control the department stores KaDeWe, Alsterhaus and Oberpollinger; eight underperformingKarstadt doors; 1,500 Quelle catalogue brick-and-mortar stores, and 115 Quelle Technical Centers. About 12,500 of Arcandor’s 50,000 employees could be affected.
The plan, revealed Monday, calls for Arcandor to concentrate on the “profitable core areas” of Primondo (catalogue, home shopping and e-commerce business); Karstadt (department and sport stores), and Thomas Cook (travel). The group has set midterm goals of an earnings before interest, taxes, depreciation and amortization margin of 7 percent for Primondo and 6 percent for Karstadt and a 4.8 percent earnings before interest and taxes margin for Thomas Cook.
Under the previous chief executive officer Thomas Middelhoff, Arcandor published adjusted figures for fiscal 2007-08, which showed an increase in group EBITDA, but according to financial circles, the group had a loss of 746 million euros, or $1.06 billion at average exchange, in the last fiscal year. Arcandor now says it will need new loans of as much as 900 million euros, or $1.17 billion at current exchange, in the next five years to carry out the consolidation program. This comes on top of this June’s refinancing of 600 million euros, or $780 million, in credit lines. Though the group’s refinancing plan is essentially based on further bank loans, Arcandor said it is also considering options to tap into state support.
At a press conference in Essen, Germany, Monday morning to unveil the changes, Arcandor’s new ceo, Karl-Gerhard Eick, said while the KaDeWe Berlin department store and the two other recently developed premium houses were “a profitable business sector,” these luxury-oriented houses no longer fit the group’s middle-market focus. Size is also an issue. Eick said Arcandor’s model format for its remaining 81 Karstadt department and 27 Karstadt Sport stores would be between 100,000 and 200,000 square feet. KaDeWe, in contrast, covers almost 650,000 square feet.
Sources close to the company expect the upscale stores to be quickly put on the block, with La Rinascente, Printemps, Galeries Lafayette or “financial investors” most frequently named as potentially interested parties. According to Arcandor, “the best options for all Atrys businesses…will be examined and implemented within the coming years. These include, among other things, disposals, strategic partnerships, management buyouts, restructuring or even closures.”
Arcandor further announced the implementation of a central purchasing policy, with the aim of achieving synergies of up to 350 million euros, or $456.4 million (or 5 percent of the total purchasing volume of 7 billion euros, or $9.1 billion) within two to three years. In addition, the new management board of the Atrys division is expected to significantly reduce what Arcandor called average annual negative cash flows (computed over several years) of 300 million euros, or $480 million.
Arcandor’s shares fell by more than 9 percent in midday trading to 1.63 euros, or $2.12, down from 1.74 euros, or $2.27.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews