German interior decoration chain Depot plans to close at least 27 branches by the end of the year due to the insolvency battle, CEO Christian Gries told dpa on Sunday.
Seventeen branches have already closed, reducing the brand’s network to 285 stores. Further closures are likely and negotiations with some landlords are ongoing, Gries said. “Forestries that are not profitable are closed completely.”
The most affected employees of Depot, known for products such as table decorations, furniture and decorative gifts, are expected to be transferred to other branches.
However, approximately 50 of the currently remaining 3,550 employees will lose their jobs due to the planned closure of the 27 branches.
At the company’s headquarters in Niedernberg in the southern state of Bavaria, the number of employees has fallen from about 650 to 500 since the beginning of this year, the company said.
Depot, a subsidiary of Gries Deco Company (GDC), faced difficulties during and after the coronavirus pandemic. Faced with the threat of insolvency, the company filed for bankruptcy in July, allowing it to continue self-governance.
The company says it is aiming for a return to regular operations by mid-2025. At the same time, Depot is working on its product ranges and a new market positioning and is reportedly considering adding external brands to its product range.
According to its own figures, Depot generated sales of around €390 million ($405 million) last year. Gries has not provided current profit or loss figures.
Depot also operates stores in other German-speaking countries. In Austria, the office network was reduced this year from 49 to 29 stores, partly as a result of bankruptcies. There are 34 branches in Switzerland.
Germany has suffered an economic downturn in recent months, with local industry expected to suffer a significant drop in output this year, while Europe’s largest economy narrowly avoided a technical recession.
Home furnishings retailers in particular are suffering from the poor outlook for consumers, as many households are reluctant to buy sustainable products, says Sabine Frühwald, consumer expert at market researcher Consumer Panel Services GfK.
In the first half of 2024, turnover at German home furnishing retailers was 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 string of company bankruptcies in Germany.
Compounding the problem, the outlook for the industry’s exports is bleak, with high energy prices and sprawling bureaucracy weighing on Germany as a business location.
