Euro crisis--Neckermann, Karstadt to shed almost 4,000 jobs

German cataloguer Neckermann said it will file for insolvency after its private-equity owner refused to provide further financing to fund its turnaround plans.
In April, Neckermann had announced a restructuring to move the business purely online. The move would have seen the company shed some 1,380 jobs as it focused away from relying on catalogues to ecommerce, where it makes 80 percent of its turnover.

“The future of mail order is in the internet. We cannot let this pass us by,” said a company statement at the time. However, just three months later Neckermann said it did not have the funds to pay staff the compensation they were seeking for the redundancies. According to reports, private equity firm Sun Capital said it had been willing to provide €25 million ($30 million, £19 million) in financing, but that the plan presented by the management would have needed €60 million ($73 million, £47 million) and it decided to withdraw investment.

At another German retailer Karstadt, some 2,000 jobs are on the line as the company announces its restructuring. The cuts are to be made primarily through early retirements, letting temporary contracts end and voluntary exits, but still see the company shed almost 10 percent of its workforce by 2014. Karstadt says challenging market conditions and the euro crisis have forced it to simplify its structures and processes, in order for it to be efficient in the long term. Karstadt was rescued from bankruptcy in 2010.

Over in France, luxury goods and retail conglomerate PPR is still seeking bids for its catalogue and online retail group Redcats. Rumours are, however, that Redcats is too expensive for potential buyers to acquire in its entirety, so PPR now plans to break it up along geographical lines. It is understood that PPR will sell the US, Scandinavian and other European businesses—which include La Redoute, Daxon and Vertbaudet—separately. According to reports, at least one part may be sold by the end of this year.