Galeria Secures €160 Million Loan from Gordon Brothers for Three-Year Restructuring

A prerequisite for the commitment was an assessment of Galeria's economic situation prepared by the management consultancy AlixPartners. On its basis, the approximately 30 locations considered insufficiently viable and up for review are to be identified.

Which Stores Are Under Review

According to dpa information, further store closures are also planned. About 30 of the current 83 department stores are considered shaky candidates and are to be examined particularly closely. Galeria is likely to have a significantly smaller store network in three years — this was stated to dpa by individuals familiar with the plans.

According to Managing Director Tilo Hellenbock, however, reopening stores at former locations is also being considered. He said: „Wir durchleuchten das gesamte Filialnetz, denn jedes Haus soll künftig wirtschaftlich tragfähig sein." The retailer intends to examine, among other things, which locations are profitable and to negotiate rent reductions and more flexible terms with landlords.

Financial Situation and Rent Disputes

Initially, a loan from minority shareholder Bain Capital is to be repaid. This reportedly amounts to approximately €80 million. It is unclear how much of the new money will remain for investments, for example in the stores.

In addition, funds are needed to order merchandise for the fall and winter season. Galeria employs around 12,000 people. Several landlords had recently complained that rents from Galeria were not being paid at all or only partially. One owner told dpa that the outstanding amounts had since been settled. Elsewhere, however, it was said that two months' rent were still outstanding.

The company attributed this to liquidity fluctuations and acknowledged having asked landlords for deferrals. After negotiations with landlords, the chain was able to significantly reduce its rent burden. As early as March, the retail chain had announced plans to renegotiate the lease agreements of eight stores.

Consumer Slump and Competitive Environment

The company cites the persistently weak consumer climate in brick-and-mortar retail as one reason for the measures. Most recently, Galeria sought to boost sales with major discount campaigns.

At the beginning of 2024, the group filed for insolvency for the third time in four years. One reason was the financial distress of parent company Signa. In the summer of 2024, nine locations were closed.

Ownership Structure and Historical Burdens

Since then, Galeria has been owned by the US investment firm NRDC and an investment company of entrepreneur Bernd Beetz. Galeria still operates 17 stores in North Rhine-Westphalia. Further store closures could incur significant additional costs, such as social plans and severance payments for employees, as well as compensation payments to landlords.

Previously, „Handelsblatt" and „Wirtschaftswoche" had also reported on the new loan. The struggling department store chain Galeria is thus receiving new loan financing of up to €160 million. The funds are tied to a three-year restructuring plan, which is now set to be implemented.

With the fresh liquidity, the company intends on one hand to ensure ongoing operations and on the other hand to finance the planned restructuring measures. Observers view the step as a signal that owners NRDC and Bernd Beetz continue to stand behind the brick-and-mortar concept.

Outlook for the Coming Months

The Galeria spokesperson stated that the company would provide information in the coming weeks about the further course of action regarding the stores. There are also still outstanding rent payments, the exact amount of which has not been publicly quantified.