Kaufhof and Karstadt form joint venture

Two major German department store chains, Kaufhof and Karstadt, will form a joint venture after Hudson’s Bay sells half of its European business to Signa Holding. The latter will hold only a little bit more than half of the entity and will manage the operating business.

For quite some time, there were speculations about a merger of Germany’s largest department store chains. And now it’s real, as Kaufhof owner Hudson’s Bay and Karstadt owner Signa have signed a 200-page letter of intent to form a joint venture between Kaufhof, Karstadt and Karstad Sport.

According to the Wall Street Journal, Hudson’s Bay will receive 1.1 billion euros from Signa as part of the transaction. Signa, in turn, will assume 750 million euros in debt.

Kaufhof and ecommerce

As most department stores have achieved, Kaufhof has also turned into a multichannel retailer. The company relaunched its online store in 2011 and saw its ecommerce turnover double every year, at least up until 2013. During that year, the company also launched a mobile version of its ecommerce websites. In 2016, the company increased its digital business by 23 percent compared to the previous year.

Karstadt and ecommerce

Earlier this year, Karstadt CEO Stephan Fanderl said: “Karstadt has developed at a rapid pace over the last three years and the goal is to turn the company into one of Germany’s strongest distributors across all sales channels by 2020.” When it comes to digitization, Karstadt wants to intensify its catch-up hunt, Die Welt wrote in March, by turning parts of its department stores into warehouses for online retail. “By 2020, the proportion of online sales is expected to increase to around 10 percent.”

Owned by Signa Holding and Hudson’s Bay Company

In 2012, the Austrian Signa Holding of real estate investor René Benko took over 17 Karstadt department stores. One year later, the company took over 75.1 percent of Karstadt-Premium-GmbH and 75.1 percent of Karstadt-Sports-GmbH. Its most significant competitor, the German department store chain Kaufhof, was acquired by Hudson’s Bay Company in 2015.