Karstadt, the German retailer owned by Nicolas Berggruen, has sold off a big piece of its business to The Signa Group, the Austrian real estate company.
Signa has paid 300 million euros, or $397.8 million at current exchange, for 75.1 percent of Karstadt’s three luxury department stores — KaDeWe in Berlin, Alsterhaus in Hamburg and Oberpollinger in Munich — as well as Karstadt’s 28 sporting goods stores. The premium stores are filled with international luxury labels like Louis Vuitton, Prada, Gucci and Hermès. KaDeWe is the second largest store in Europe next to Harrods in London.
Berggruen retains a 24.9 percent stake in the luxury stores and the sporting goods stores, and continues to maintain 100 percent ownership of Karstadt’s core, 83-unit department store chain that operates throughout Germany.
On the deal with Signa, Berggruen said: “This is my contribution to Karstadt’s further recovery. I believe in the company and its employees, who are now gaining additional scope and security. I have done this transaction in order to save the future of the organization.”
Berggruen rescued the $4 billion Karstadt out of insolvency in 2010 and has since streamlined operations and staff and triggered a major modernization of the business, working with chief executive officer Andrew Jennings, who has been orchestrating the “Karstadt 2015” strategy. It’s focused on re-merchandising, refurbishments and modernizations, and elevating the profile of the department stores. The 300 million euros will be invested in furthering the strategy.
Signa is already Karstadt’s biggest landlord. Last year, Signa acquired the KaDeWe site along with 16 other Karstadt locations, and in 2001, Signa bought the Oberpollinger site.
Separately, Karstadt revealed that Stephan Sandel is succeeding Jared Bluestein as the new chairman of the supervisory board. Jennings will now report to Sandel and the board. Jennings is planning to leave Karstadt at the end of the year when his contract expires. He has hinted that his next move will be in London.