Germany’s interior decorations retailer Depot plans to close at least 27 branches by the end of the year amid its insolvency struggles, chief executive Christian Gries told dpa on Sunday.
Seventeen branches have already been closed down, reducing the brand’s network to 285 shops. Further closures are likely and negotiations with some landlords are ongoing, Gries said. “Branches that are not profitable will be closed completely.”
Most impacted employees at Depot, known for products like table decorations, furniture and ornamental gifts, are expected to be transferred to other branches.
However, approximately 50 of the currently remaining total of 3,550 employees will lose their jobs due to the planned closure of the 27 branches.
In the company’s headquarters in Niedernberg in the southern state of Bavaria, the number of employees has decreased from around 650 to 500 since the beginning of the year, the company says.
Depot, a subsidiary of the Gries Deco Company (GDC), faced difficulties during and after the coronavirus pandemic. Due to the threat of insolvency, the company filed an application for insolvency in July allowing for continued self-administration.
The company says it is seeking to return to regular operations by the middle of 2025 at the latest. At the same time, Depot is working on its product ranges and a new market positioning and is reported to be considering adding external brands to its product range.
According to its own figures, Depot generated a turnover of around €390 million ($405 million) last year. Gries did not provide any current profit or loss figures.
Depot also operates shops in other German-speaking countries. In Austria, the branch network was reduced from 49 to 29 shops this year, also as a result of insolvency. In Switzerland there are 34 branches.
Germany has been struggling with an economic downturn in recent months, with local industry expected to suffer a significant decrease in production this year, while Europe’s largest economy has been narrowly avoiding a technical recession.
Home furnishing retailers in particular are suffering under the poor consumer outlook, since many households are reluctant to buy durable products, says Sabine Frühwald, consumer expert at market researcher Consumer Panel Services GfK.
In the first half of 2024, sales at Germany’s home furnishing retailers were almost 14% lower than five years earlier.
The country’s central bank – the Bundesbank – has said the country’s weaker economic phase is likely to continue into the fourth quarter, due to headwinds including China’s slowing economy and a series of corporate bankruptcies in Germany.
Compounding the problem, the outlook for industry exports is gloomy, with high energy prices and sprawling bureaucracy weighing on Germany as a business location.
