Department store chain Karstadt announced this week it was shedding 2,000 jobs while around 25,000 workers were left unemployed by the collapse of drug store chain Schlecker.
After days of tense discussion, Neckermann's major investor Sun Capital Partners said it would not finance a much-needed reorganisation of the company, the Financial Times Deutschland reported on Thursday.
Long past its heyday in post-war Germany, the company has been struggling since the 1970s and in 2011 reported losses of around €30 million. Its package holiday section Neckerman-Reisen.de was sold to Thomas Cook and is not affected by Wednesday's announcement.
A deal was practically on the table after long talks between the management and workers, represented by service trade union Verdi.
“The workers' council, Verdi and the management had agreed upon an acceptable compromise,” Wolfgang Thurner, union secretary, told the FTD.
A spokesman for Neckermann confirmed this, telling the paper, “The negotiations were largely finished, as agreement had been reached on further points between the company and workers' representatives.”
But a spokeswoman for Sun said, “The plan which was presented to Sun by the company would have cost around €60 million. That is the reason why Sun could not say yes.”
Sun made a “last ditch” attempt to rescue the firm in April, investing €25 million to turn it into an online-only firm. This came after previous cash injections of allegedly €200 million, the FTD said.
But a fight between management and workers ensued – as the plans would have seen 1,380 of the 2,400 jobs cut and workers let go without any compensation or redundancy.
This struggle was finally put aside this week and a reorganisation plan put on the table – only for Sun to say the €60 million it required was too much. The search for new investors will now start with a view to keeping the company going, but the FTD said there was little hope of success.
Neckermann now follows the now closed drug store chain Schlecker into administration, leaving experts wondering whether other troubled companies could follow.
In an opinion piece, financial newspaper Handelsblatt blamed Germany's struggling retailers on their inability to modernise. Firms have to move quickly to keep the customer on their side, chief editor of the paper's online site said.