Signa Holding is in financial difficulties – this threatens Karstadt, Globus and Co. German Interior Minister bans Hamas++ about 400 foreigners from leaving Gaza Strip

“Getting rich has never been so boring.” – that is what real estate magnate René Benko said fifteen years ago. He turned out to be right: the 46-year-old became a multi-billionaire with his real estate and trading company Signa.

Today he is one of the richest Austrians. Forbes estimates his fortune at $5.9 billion. He lives a life of luxury, associating with highly respected politicians and other superior entrepreneurs – and has also been involved in a corruption scandal or two.

However, an important pillar of Signa, the online sports retailer Sports United (SSU), had to file for bankruptcy on Friday. The reason for this is the insufficient financial resources after Signa Holding withdrew a share commitment of more than 150 million euros.

The beginning of Signa

Signa is in trouble 23 years after its founding and has liquidity problems. The beginning of the company was so promising. Benko founded the predecessor of Signa in 2000. A preliminary success story was about to begin: the company has registered enormous growth during its 23 years of existence – on its website the group lists a real estate asset of 28 billion euros.

While the company initially focused on classic real estate development, it has now developed into a pan-European real estate and trading company with various office locations.

But behind closed doors, not everything went well at Signa: the Vienna Regional Criminal Court has condemned this Signa founder Benko was given a one-year suspended sentence in 2012 for a corruption crime. “A model case of corruption,” was how the judge explained the verdict at the time. Benko took a back seat in 2013 and from then on worked as a strategic advisor for Signa.

In the same year, “Signa Retail”, a new part of Signa, acquired the majority of the shares in “Karstadt Sports” and “Karstadt Permium”. This was the first time the company entered operational trading. In the summer of 2014, Signa also took over the entire Karstadt Warenhaus GmbH. More takeovers followed, but the first dissatisfied employees were not long in coming.

Benko became an enemy to some of the 45,000 employees in Signa’s retail sector, as more and more branches of various stores were closed over the years as jobs were cut. In 2020, approximately 35 branches of Galeria Kaufhof and Karstadt Sports were closed in Germany. 2,500 employees lost their jobs. At the time, hundreds of them were protesting against the layoffs in North Rhine-Westphalia – and they had a whipping boy with them: they angrily hit a cardboard cutout of Benko.

This is what is known about the SSU bankruptcy

The protests in 2020 were just the beginning: in March 2023, employees of “Galeria Karstadt Kaufhof” also demonstrated against Benko for closing another 52 branches. Approximately 4,300 employees were affected by this measure.

Last Friday, Signa Sports United (SSU) filed for bankruptcy. The online shop Tennis-Point, a subsidiary of SSU, had previously filed for bankruptcy.

The bankruptcies were no surprise. Signs of impending financing problems at Signa became visible as early as the spring. In March 2023, Signa sold 49.9 percent of the real estate in the Berlin department store “KaDeWe” to its business partner, the Central Group. In 2013, Signa Holding still owned 75.1 percent of the famous department store.

In June this year, it was reported that Signa had sold Austrian furniture chain Kika/Leiner and its 40 properties, even though it had only acquired them in 2018.

At the same time the signal stopped Large real estate projects, such as the construction of the prestigious Elbtower project in Hamburg, there is no money for financing. Some investors have publicly expressed a desire to sell their shares.

This is how Switzerland could be affected

In Germany, the urgent question now arises whether the group’s challenges pose a threat to the “Galeria” department store chain. Only in the spring was Galeria Karstadt Kaufhof released from its second insolvency procedure within three years – after announcing several closures.

According to Galeria boss Olivier Van den Bossche, there is no immediate danger. Speaking to Handelsblatt, he explained: “We are not Signa Sports United. Galeria has relieved itself of the burden of the protective shield and is positioned leaner and more agile than before.”

But Swiss employees can also be affected by Signa’s problems: the Globus Group changed hands three years ago. Half of the major department stores went to Benko’s Signa Group and the other half to the Thai Central Group. The Bayard Group took over the smaller fashion houses.

Globus made a statement to the Tagesanzeiger that they were not affected by the developments at Signa. The operational activities are free of bank debt and are progressing according to plan. The property is financed on a long-term basis and the construction site in Basel will proceed as planned.