KarstadtQuelle, union hold crisis talks

11th October 2004, Comments 0 comments

11 October 2004, ESSEN/NUREMBERG - Germany's ailing retail giant KarstadtQuelle and union negotiators Monday entered a week of talks on the company's plans for a costly overhaul strategy requiring workers' approval of concessions to help in the rescue. Hinging on the outcome of the talks are major new loans to the company by banks and shareholder approval of a EUR 500 million capitalisation increase in order to underwrite the costs of the reorganisation. The talks were being held in Nuremberg, home to the

11 October 2004

ESSEN/NUREMBERG - Germany's ailing retail giant KarstadtQuelle and union negotiators Monday entered a week of talks on the company's plans for a costly overhaul strategy requiring workers' approval of concessions to help in the rescue.

Hinging on the outcome of the talks are major new loans to the company by banks and shareholder approval of a EUR 500 million capitalisation increase in order to underwrite the costs of the reorganisation.

The talks were being held in Nuremberg, home to the mail order division Quelle, and in Essen, the overall company headquarters.

Sources on the workers' side described the negotiations so far as having been "tough, but off to a partner-like start".

The head of the KarstadtQuelle workers' council, Wolfgang Pokriefke, described a "very critical phase" in the talks.

"The goal is to achieve an agreement this week," he said.

KarstadtQuelle's supervisory board meets Thursday for what would be the last chance to be able to launch the envisaged capitalisation increase before the end of the year.

While officials at the services workers union ver.di said their hope is for an agreement to avert layoffs, company spokesman Joerg Howe said earlier Monday that "there will be no getting around layoffs".

Besides that, other concessions could include employees giving up five vacation days a year and "heading in the direction of a 42-hour" working week.

The talks come some two weeks after KarstadtQuelle announced its "deepest cuts" ever to overhaul its business, with the company aiming to close down and sell off some one-half of its current 181 department stores and cut its 100,000-strong payroll.

The company has not specified how many jobs might be at stake, while ver.di officials said up to 30,000 jobs could be either directly or indirectly affected by the closures and sales of the department stores and speciality retail outlets.

KarstadtQuelle posted adjusted pre-interest losses of EUR 388.5 million in the first half of 2004, some 34 percent above the EUR 289.3 million red ink in the same period last year.

The company is bracing for further red ink this year of EUR 160 to EUR 200 million, while also telling shareholders there will be no dividends for either 2004 or 2005. In 2006, the company aims to be back in the black with operating profits of EUR 355 million.

The company, hurt by sagging German consumer demand in a sluggish economy burdened by stubbornly high unemployment, warned in August that it may post full-year losses of some EUR 200 million in absorbing the costs of its overhaul.

DPA

Subject: German news
 

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