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Karstadt set to reap unexpected profit

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Karstadt set to reap unexpected profit
Photo: DPA
11:03 CEST+02:00
The beleagured high-street department store Karstadt has shown itself to be a more stable business than previously thought, with insolvency commissioners expecting a profit this year.

"Things are going significantly better than planned," insolvency commissioner Rolf Weidmann told financial weekly Wirtschaftswoche on Saturday.

According to the magazine's report, Nicolas Berggruen, the German-American investor currently overseeing the restructuring of Karstadt, is building on a stronger business model than previously diagnosed.

Weidmann is expecting a stable turnover and a profit margin in the tens of millions for the current business year, which ends in September. In the year before the insolvency declaration of June 2009, Karstadt had recorded a loss of around €120 million.

Earlier appraisals by potential bidders had predicted a profit of €39 million, before interest, taxes and allowance for depreciation. Now figures of between €45 and €60 million are being mooted internally.

The improved prognosis is attributed to a combination of production cuts in the restructuring plan, a good Christmas shopping season, and extra World-Cup-related sports equipment sales.

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