Schlecker rescue fails, 13,000 jobs doomed

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Schlecker rescue fails, 13,000 jobs doomed

The insolvent German drugstore chain Schlecker is to be broken up with the loss of 13,200 jobs after a panel of creditors decided there was no way forward for the beleaguered business, administrators announced on Friday.


Receiver Arndt Geiwitz said there was "no prospect of finding an economically justifiable basis to continue Schlecker's operations or of selling it to an investor."

Interested buyers had been given a week from last Friday to improve their offers, with Nicolas Berggruen, owner of department store Karstadt, and American consortium Cerberus reportedly among potential investors. But Geiwtiz revealed that the offers tabled were "not acceptable as they do not approach the values that can be attained by breaking up the company."

The receivers will now proceed with a plan to sell off the 2,800 stores as quickly as possible, as well as foreign subsidiaries and other assets like logistics centres and properties. Only the chain’s German subsidiaries, Ihr Platz and Schlecker XL, which between them employ roughly 5,000 people, will survive, Der Spiegel magazine reported on Friday.

Geiwitz said he regretted that Schlecker’s "many and often long-standing employees" would lose their jobs. This follows the dismissal of 11,000 workers immediately following the bankruptcy in early March. The creditors will now work with the employee organisation to develop a social plan for the affected workers.

Schlecker, founded almost 40 years ago, filed for protection from its creditors in January. The court-appointed administrators attempted to rescue the company by slashing the workforce from 30,000 to 13,500 and reducing the number of outlets from 7,500 to less than 3,000.

Administrators were able to cut Schlecker’s losses from €200 million to roughly €25 million, but according to Geiwitz, the "ambitious but fundamentally feasible" plan to secure an economically viable future for the company foundered on high staff costs and the stringent stipulations of suppliers, as well as 4,400 outstanding unfair dismissal claims.

The giant services sector union Ver.di expressed "anger and disappointment" at the decision, and called for a rally of Schlecker employees outside the Chancellery in Berlin, Der Spiegel magazine said.

Christel Hoffmann, head of Schlecker’s employee organisation, said the news was "a human and social catastrophe for the employees and their families." She called for politicians to intervene.

Meanwhile, an unnamed former director of the company told the Handelsblatt newspaper that the disaster could have been foreseen well in advance. "We have been functioning like a pyramid scheme since the mid-90s," he told the paper. "We were only able to continue through constant expansion."

At its height, Schlecker had more than 8,000 outlets throughout Germany, more than double the number of stores of all its competitors combined.

But with Rossmann and dm stores boasting more attractive locations and a broader range of products – Schlecker never carried medicine – the drugstore chain began to struggle. "Schlecker’s greatest achievement," the anonymous director told the Handelsblatt, "was that it managed to hang on for so long."

AFP/The Local/jpg


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