The collapse of Rene Benko’s real estate empire is spreading to his luxury retail assets, with department store operator KaDeWe Group filing for insolvency in Berlin.
KaDeWe, which runs the eponymous department store in Berlin as well as high-end outlets in Munich and Hamburg, was “forced” to apply for a self-administered insolvency to uncouple from the high rents it has to pay, the company said in a statement on Monday.
KaDeWe pays rents to a unit of Benko’s Signa organisation, which handles its stakes in the operating company and its underlying property separately.
While the stores are operationally healthy, the rental burdens are harming profitability, chief executive officer Michael Peterseim said. “Numerous discussions with the landlord have not changed this, nor, unfortunately, have the insolvencies at Signa.”
The group posted sales of almost €728 million ($786 million) in the 2022-2023 financial year, the highest in its history and almost 24 percent higher than in the pre-Covid period, it said. Rents have risen by almost 37 percent compared to the 2018-2019 financial year, the company said.
“This means that the business is clearly profitable ‘before rent’— but clearly not ‘after rent’,” it said.
KaDeWe Group is majority owned by Thailand’s Central Group, which bought a 50.1% stake in the three department stores from Signa in 2015.
Central Group was unable to reach an agreement on store rents due to the “intransigent position of KaDeWe’s landlord,” the Thai conglomerate said in a statement.
The group, which also partnered up with Signa to acquire Swiss retailer Globus in 2020 and UK Selfridges department stores in 2021, said KaDeWe’s insolvency would not affect the rest of its portfolio, according to a separate statement. “Central Group remains committed to providing full support to KaDeWe and its other European luxury stores,” it said.
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