BERLIN — KarstadtQuelle, Europe’s largest department store and mail-order group, plans to sell 77 smaller Karstadt department stores as well as the 305-door SinnLeffers, Wehmeyer, RunnersPoint and GolfHouse specialty store chains.

The beleaguered Essen-based group revealed its radical restructuring plan on Tuesday. As part of the reorganization, 77 Karstadt department stores with less than 86,000 square feet of sales space each are to be transferred to a new company and sold to an investor as soon as possible, KarstadtQuelle said. The SinnLeffers, Wehmeyer, Runners Point and GolfHouse chains are also on the block, as is the Karstadt Fitness studios and the group’s stake in Starbucks in Germany.

Analysts speculated that the properties would likely be sold piecemeal, with no retailer or company likely to buy the entire package of stores.

A core of 89 large department stores will remain in the portfolio, including the Berlin flagship, KaDeWe. Assortments will be fine-tuned to clearly focus on the high-margin lifestyle segments of fashion, sport, cosmetics, jewelry, leather goods and books, the retailer said in a statement.

The restructuring plan, which also includes a reorientation of the Quelle and Neckermann catalogue businesses, is expected to entail extraordinary and non-recurring expenses of 1.37 billion euros, or $1.69 billion at current exchange rates.

KarstadtQuelle suffered losses of 300 million euros, or $369.8 million, in the first half of 2004, and the group is now forecasting an EBTA (earnings before taxes and goodwill amortization) loss of 1.3 billion to 1.34 billion euros, or $1.6 billion to $1.65 billion, for the full year. However, the group said sales of the various properties should bring in about 1.1 billion euros, or $1.36 billion, and the restructuring measures are also expected to positively impact earnings in 2005. “Adjusted earnings are to increase to 100 million euros [$135.6 million],” the company said.

To finance the plan, the supervisory board will ask for a capital increase of 500 million euros, or $616.3 million, at an extraordinary general meeting of shareholders. Major Karstadt shareholders, the Madeleine Schickedanz pool and Dresdner Bank, have indicated they will underwrite the capital increase in proportion to their holdings.

Christoph Achenbach, chairman of the management board, would not say how many employees will be made redundant by the plan. Last summer, KarstadtQuelle announced plans for 4,000 layoffs and sources recently estimated a total of 8,500 jobs could be lost. The union ver.di said on Tuesday that 30,000 workers would be affected by the changes.

This story first appeared in the September 29, 2004 issue of WWD. Subscribe Today.