Galeria secures 160 million euro credit line as restructuring and potential store closures loom

A lifeline from Gordon Brothers

Galeria, the embattled German department store chain, has secured a credit line of up to 160 million euros from US investment firm Gordon Brothers. The facility, collateralized by Galeria's merchandise inventory, was finalized after weeks of negotiations and relies on an economic assessment prepared by consultancy AlixPartners. A company spokesperson confirmed the arrangement to dpa on Thursday, noting that further store closures are part of the package.

Three-year overhaul and store scrutiny

The credit is tied to a three-year restructuring plan that will see every location evaluated for viability. Galeria managing director Tilo Hellenbock told dpa the retailer will examine which sites are profitable and negotiate rent reductions and more flexible lease terms with landlords.

“We are scrutinizing the entire store network, because every store should be economically viable in the future.”

About 30 of the current 83 department stores are considered shaky and will undergo especially thorough review. People familiar with the plans told dpa that Galeria is likely to operate a significantly smaller network in three years, though Hellenbock added that reopening at former locations is also being considered. The company employs around 12,000 people.

Financial patchwork: repaying Bain, settling rents

Much of the fresh money will be swallowed by existing obligations. The priority is to redeem a Bain Capital loan of about 70 million euros, which carried a 15 percent interest rate; market sources say the redemption will cost roughly 80 million euros. Galeria also faces overdue rental payments. Several landlords had complained that rents were only partially paid or not paid at all; the company cited liquidity fluctuations and confirmed requesting deferrals. One property owner told dpa that outstanding amounts have since been settled, while others said two months' rent remains unpaid. Commerz Real confirmed that arrears for the Alexanderplatz store in Berlin have now been cleared.

A long history of turmoil

Galeria has undergone three insolvency proceedings in four years, the most recent filed in early 2024, partly triggered by the financial collapse of former parent Signa. In summer 2024, nine stores were closed, leaving 83 locations, down from 170 when Kaufhof and Karstadt merged to form the chain in 2020. The company is now owned by US investment firm NRDC and a holding of entrepreneur Bernd Beetz. Gordon Brothers is a familiar name in the Galeria orbit: the investor previously oversaw clearance sales at Kaufhof and Karstadt outlets before their shutdowns.

What next?

The credit eases immediate liquidity pressure, but it does not solve deeper structural problems. The chain continues to struggle with weak consumer spending in German bricks-and-mortar retail, high rents relative to sales, and an investment backlog that Johannes Berentzen, managing partner of consultancy BBE, estimated in February at several hundred million euros. Galeria has been running aggressive discount campaigns to boost revenue, but further store closures could bring additional costs for social plans, severance payments, and landlord compensation. While the Gordon Brothers facility buys time, the retailer's long-term future remains fragile.