German fashion companies successively go bust
One German fashion industry company after another is closing down, as they are unable to sustain viable operation in the wake of the coronavirus pandemic and amidst the high inflationary environment and declining consumer purchasing power.
The German fashion sector’s economic woes are putting an increasing number of companies in crisis. Most recently, Ahlers AG has thrown in the towel. The company and its seven subsidiaries filed for bankruptcy at the District Court of Bielefeld due to impending insolvency. The subsidiaries are Ahlers PC GmbH, Ahlers Retail GmbH, Ahlers Zentralverwaltung GmbH, Ahlers Vertrieb GmbH, Pioneer Berufskleidung GmbH, Pioneer Jeans-Bekleidung GmbH and Baldessarini GmbH. The primary reason for the decision was the slowing growth of business, which was deeply below even the most pessimistic forecasts.
The problem arose during the coronavirus pandemic, when the sector experienced hiccups in supply chains, prices kept creeping upwards and consumer confidence fell dramatically and has stagnated ever since.
The first quarter of this year saw the bankruptcy proceedings of 27 fashion and shoe retailers, Handelsblatt reports. This is more than twice the number in the same period of last year, an analysis by the Falkensteg advisory firm made for Handelsblatt suggests. Other notable fashion and shoe industry groups are also fighting for survival, including the fashion retailer P&C. The Reno shoe retail chain has also filed for bankruptcy recently, while the Humburg-based Gortz shoe retailer went bankrupt last year. These bankruptcy proceedings normally affect only the German divisions and not their sister companies and subsidiaries abroad at the moment.
Retail is struggling in almost all German states, but the problem appears to be somewhat worse in Bavaria than in the rest of the country. The outlook is therefore rather gloomy, the German Retail Federation (HDE) says, predicting that around 9 thousand stores will close this year alone.
Declining consumer purchasing power and rising costs, often make the further operation of the business unfeasible. HDE forecasts that only 311 thousand shops will be left standing across the country, excluding small businesses. By comparison, there were 373 thousand stores in 2015.
Figures from recent years should set off alarm bells in all city centres and among politicians. Without successful retail, city centres have bleak prospects for the future, warns Alexander von Preen, president of HDE, adding that the growing number of vacant premises in many of the city centres makes locations less attractive and endangers other businesses. If retail dies, the city dies with it, he says.