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Germany’s Biggest Department Store Files for Insolvency, Victim of COVID-19 Collapse

Galeria Karstadt Kaufhof, Germany’s biggest department store retailer, filed for administrative insolvency, the equivalent of bankruptcy proceedings in the U.S.

The filing on Wednesday follows the bankruptcy petition of Laura Ashley in the U.K. last month, both victims of the catastrophic coronavirus pandemic.

Galeria’s stores, where consumers can shop brands including Adidas, Calvin Klein Jeans, Ralph Lauren and Scotch & Soda, have been shuttered since March 18 as retailers closed their doors to help curtail the spread of the global health crisis, as mandated by the German government. That prompted HDE, a German retail association, to call for state aid and tax relief to help businesses impacted by the mandate.

The closures and lost sales are “destroying thousands of independent companies and millions of jobs,” Josef Sanktjohanser, HDE president, told Reuters last month. The shutdowns, the retail trade group said, would lead to a daily loss of sales of 1.15 billion euros ($1.25 billion), or 7 billion euros ($7.60 billion) per week.

According to the Financial Times, Galeria was losing 80 million euros ($86.9 million) in sales each week and plans to restructure its operations. The company had already furloughed many of its workers.

Though Germany has confirmed approximately 85,000 coronavirus cases, its comparatively low death toll of 1,104 has attracted considerable attention from countries battling back spiraling outbreaks. However, science experts advising the German government believe the country must increase the number of daily COVID-19 tests from 50,000 to 200,000 if it wants to forestall the kind of devastating epidemics that have ravaged Italy, China and the U.S.

Galeria Kaufhof, once a subsidiary of Metro AG, was acquired by Hudson’s Bay Co. in September 2015. It merged with Karstadt, a competitor, in September 2018 and was acquired by Austria’s Signet Holding in June 2019, the company that had partnered with HBC to effect the merger of  Kaufhof and Karstadt.