René Benko finally has the final say at Karstadt.
The German Federal Cartel Office approved the takeover of 88 of the upscale retail stores and locations by the Austrian real estate investor’s Signa Holding, which last year acquired a 75 percent stake in the struggling retailer.
The acquisition includes 83 department stores and five K-Town stores.
Karstadt had been owned by German-American billionaire Nicolas Berggruen, who acquired the company in 2010. Initially hailed as a savior, Mr. Berggruen has been criticized for cutting jobs, not investing enough and losing ground to rival Kaufhof.
It took less than a week for the cartel office to approve the sale to Mr. Benko.
“It comes down to one investor replacing another,” said Andreas Mundt, president of the cartel office. He said the transaction doesn’t affect the market position of individual Karstadt stores.
Now, Mr. Benko can do what he wants with Karstadt and can no longer use the pending decision of the cartel board as a pretense for inaction. He must quickly find trusted people to place on the supervisory board, the panel that appoints the chief executive and makes strategic decisions, and schedule a meeting.
That effort already has been postponed twice.
Most importantly, Mr. Benko needs a new leader at a company where turmoil in the executive offices has been the norm, not the exception.
Five top executives have come and gone over the past 10 years while a half-dozen board members have been replaced since 2011.
Mr. Benko needs a new leader at Karstadt, a company where turmoil in the executive offices has been the norm, not the exception.
The difficult road to recovery Karstadt faces and the rapid shuffling and discarding of top executives makes the top job at the retailer unattractive to the best managerial talent.
“I wouldn’t take on a ‘CEO Karstadt’ search mission. That says everything, doesn’t it?” said Heiner Thorborg, a Frankfurt executive recruiter.
Alexander Gregor, head of the global consumer and retail practice at Kienbaum Executive Consultants in Hamburg, noted that “Trust is lacking and the best personnel consultant can’t iron that out.” Mr. Gregor said there is a limited pool of retail managers with department store experience in Germany.
“All have a perceived opinion of Karstadt,” he said, an opinion that isn’t good.
The chief executive officer job could fall to Stephan Fanderl, chairman of the supervisory board since October 2013. Mr. Fanderl is known as a hands-on supervisor and has extensive retail experience. He was member of the management board at REWE, a supermarket chain based in Cologne, and has held posts at rivals Metro AG and Wal-Mart Stores Inc.
In 2012, he was tapped to restructure the bankrupt drug store chain Schlecker, but the company was eventually liquidated.
Mr. Fanderl may be the only candidate willing to accept one of the toughest jobs in German business since the constant stream of comings and goings has decimated the highest levels of management.
Thomas Middelhoff, who was tainted by accusations of misconduct when Karstadt’s corporate parent Arcandor filed for bankruptcy in 2010, was replaced as chief executive officer in 2009 by Karl-Gerhard Eick, the former chief financial officer at Deutsche Telekom. He is remembered known for standing on a red ladder and wielding a megaphone while telling employees, “We will fight to the last minute.”
Mr. Eick lasted less than a year in the job.
The bankruptcy of Arcandor quickly followed.
Turnaround expert Thomas Frank succeeded Mr. Eick and made the retailer more attractive by cutting prices.
When Mr. Berggruen bought Karstadt for the symbolic price of one euro, Mr. Frank left and the new owner went to South Africa to find a new leader for Karstadt. He convinced Andrew Jennings, a well-regarded, London-born retail professional who had led Woolworth’s South Africa, to come out of retirement and head the Essen-based retailer.
But Mr. Jennings’ complete lack of experience in the German retail sector was fatal as he introduced a flurry of new products to Karstadt including more than 50 new fashion labels, many of them from the United States and Great Britain. The largely conservative Karstadt customers were unfamiliar with brands such as “French Connection,” “Phase 8,” “Lipsy” and “Ellen Tracy,” and left them lying unsold on the shelves.
“Some say he didn’t take German culture and shopping habits into consideration enough,” said Mr. Berggruen when Mr. Jennings stepped down after just two years on the job. “We take the blame for this mistake.”
In February, Eva-Lotta Sjöstedt, a Swedish manager, succeeded Mr. Jennings. The former Ikea manager tried to restructure Karstadt in a gentler fashion, but threw in the towel after less than five months, citing differences with Mr. Berggruen.
The question, once again, is: Who will the new owner — this time Mr. Benko — appoint as the next savior of Karstadt? And can he or she save themselves?
The author covers the retail sector for Handelsblatt and can be reached at email@example.com