German home decor retailer Depot plans to close at least 27 branches by the end of the year amid cash flow problems, CEO Christian Gries told dpa on Sunday.
Seventeen branches have been closed, bringing the brand’s network to 285 stores. More foreclosures are possible and negotiations with other landlords are ongoing, Gries said. “Unprofitable branches will be closed completely.”
Most of the affected employees at the Depot, known for products such as table decorations, furniture and decorative gifts, are expected to be transferred to other branches.
However, around 50 of the remaining 3,550 employees will lose their jobs as a result of the planned closure of 27 branches.
At the company’s headquarters in Niedernberg in the southern state of Bavaria, the number of employees has dropped from 650 to 500 since the beginning of the year, the company said.
Depot, a subsidiary of Gries Deco Company (GDC), faced difficulties during and after the coronavirus pandemic. Due to the threat of bankruptcy, the company filed for bankruptcy in July, allowing it to continue to manage itself.
The company says it wants to return to normal operations by mid-2025 now. At the same time, Depot is working on its brands and new market positioning and is reportedly considering adding foreign brands to its product range.
According to its figures, Depot made a profit of around €390 million ($405 million) last year. Gries did not provide current profit or loss figures.
The depot also has stores in other German-speaking countries. In Austria, the branch network was reduced from 49 stores to 29 this year, also due to lack of funds. In Switzerland there are 34 branches.
Germany has been struggling with recession in recent months, with the country’s industry expected to experience a sharp drop in output this year, while Europe’s largest economy narrowly avoided recession.
Home furniture retailers in particular are suffering under poor consumer perception, as many households are reluctant to buy durable products, said Sabine Frühwald, consumer expert at market researcher Consumer Panel Services GfK.
In the first half of 2024, sales of German domestic goods were about 14% lower than five years earlier.
The country’s central bank – the Bundesbank – says the country’s weak economic phase is likely to continue into the fourth quarter, due to problems including China’s economic slowdown and a series of corporate bankruptcies in Germany.
Adding to the problem, the outlook for industrial exports is bleak, high prices and growing bureaucracy weigh on Germany as a business location.
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