Karstadt to Cut 2,000 Jobs by End of 2014
07/17/2012| 07:01am US/Eastern
FRANKFURT--German department store chain Karstadt plans to cut 2,000 jobs by the end of 2014 as part of its ongoing restructuring measures, in a further sign of the deepening problems faced by Europe's retailers.
"The measures are painful for our staff, but necessary," said Chief Executive Andrew Jennings. "Karstadt has to adjust its organization to remain competitive and to take the necessary steps to secure our long-term success."
Karstadt employs about 24,400 staff. The chain was taken over by billionaire investor Nicolas Berggruen in 2010 after being threatened with insolvency.
The announcement is the latest blow to Europe's retail sector, which is struggling under the effect the European debt crisis and subsequent government austerity measures have had on consumer spending.
In January, German retailer Metro AG (>> METRO AG) suspended plans to sell its department store unit Galeria Kaufhof GmbH until further notice due to poor conditions on capital markets.
French chain Carrefour SA (>> CARREFOUR), the world's No. 2 retailer by sales after Wal-Mart Stores Inc. (>> Wal-Mart Stores, Inc.), last week reported a fall in second-quarter sales, while the U.K.'s Tesco PLC (>> Tesco PLC) earlier this year issued its first profit warning in 20 years after a disappointing Christmas period.
Karstadt said it had seen some signs of success from its restructuring strategy, which was introduced 18 months ago and is also involving store revamps.
The German retailer will resume normal employee remuneration in accord with the sector's collective-bargaining agreement, after staff received reduced entitlements for the past three years to allow for the turnaround of the company.
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