German Retailer Galeria Faces New Wave of Closures

The German department store chain Galeria is initiating a review of 33 of its branches to assess their profitability, a process that could result in significant closures. The company announced that it will engage in negotiations with landlords regarding lease conditions and necessary space modifications for the potentially affected stores. Failure to reach agreeable terms could jeopardize the continued operation of these locations.

Galeria stated that the selection criteria for these reviews include factors such as rental burden and revenue generation. "We will examine each location individually and with an open mind," said CEO Tilo Hellenbock. While discussions have already begun for some stores, others will see negotiations commence shortly. The company emphasized that all its stores must operate profitably in the long term, and since all branches have potential for optimization, talks with landlords will extend to the remaining 50 locations as well.

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We will examine each location individually and with an open mind.

This review comes shortly after Galeria secured a new credit line of up to 160 million euros from the U.S. investment firm Gordon Brothers. This financing is tied to a restructuring plan that includes further store closures. In June, it was already reported that approximately 30 of the chain's 83 stores were considered at risk. The new funds are intended, in part, to repay a loan from minority shareholder Bain Capital and to settle outstanding rent payments.

Several landlords have reported that rent payments were either not made or only partially paid in recent months. Galeria attributed these issues to liquidity fluctuations and acknowledged requesting deferrals from landlords. The company, which employs around 12,000 people, filed for insolvency for the third time in four years at the beginning of 2024, partly due to the financial difficulties of its parent company, Signa. In the summer of 2024, nine locations were closed, and the chain is now owned by U.S. investment firm NRDC and a company associated with entrepreneur Bernd Beetz.

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All department stores must operate profitably in the long term.