When, in 2005, Thomas Middelhoff took over at the helm of Germany’s struggling department store chain Karstadt, the retailer’s 17,000-strong workforce was hopeful that he was the man to turn things around.
Alas, all he achieved was the bankruptcy of the more than 100 year-old company.
And when investor Nicolas Berggruen took over the chain in 2010, employees again thought they’d found their savior. But what followed were years of infirmity and decline.
So when last year, investor René Benko and his Signa empire took over Karstadt, staff were understandably cautious about Karstadt’s future.
They were right to be.
Under Mr. Benko, a 37-year-old real estate developer and alleged billionaire, things were finally supposed to look up for the country’s second-largest department store chain. But, just as had been the case with the two previous owners, his strategies to save the chain are stalling.
And what’s more, Mr. Benko is drawing increasing criticism for his activities away from Karstadt. A closer look at the mesh of Signa Group companies reveals many inconsistencies. They revolve around the moving around of real estate within the group, the possible passing on of losses to external investors, questionable sources of profit and suspect internal loans.