Canadian retailer Hudson’s Bay Co (HBC) has been ordered by a court in Berlin to keep a Galeria Kaufhof department store in the German capital open, reversing the company’s earlier moves to shut it down.
The court verdict was issued this week in a case brought by Unibail-Rodamco, which owns the property housing the department store in question. The provisional ruling means HBC, which owns the Galeria Kaufhof department store chain totalling close to 100 stores in Germany, must comply with the rental contract for the property, which is located near Berlin’s Ostbahnhof station and is one of four stores in the German capital.
HBC, which acquired the Kaufhof chain in 2015, announced over a year ago that it planned to close the Ostbahnhof store due to delays and organisational errors in renovating the property on the part of the landlord. The Canadian retailer initiated moves to terminate the rental agreement with Unibail-Rodamco and started clearance sales.
Unibail-Rodamco hit back by launching legal proceedings to hold HBC to the rental contract. Under this week’s ruling, HBC has to keep the store open for the time being, offer sufficient products to the customer and deploy qualified staff as well as stop the clearance sales.
HBC has said it will appeal the court decision, which is a further headache for the Canadian company already under pressure due to deepening losses at Galeria Kaufhof and calls from an activist shareholder to pull out of Europe.
Committed to Europe
The Canadian retailer has insisted it remains committed to its European investments in Germany, Belgium and the Netherlands, despite activist investor Jonathan Litt urging it to take drastic steps to make more money from its assets. Litt owns Land & Buildings, which holds about a 5% stake in Hudson's Bay.
‘Our commitment to the German market and to our investments across Europe are stronger than ever,’ HBC's CEO Jerry Storch said in a recent statement released in German.
‘Even though the market for clothes and department stores globally is challenging and the business is developing at a slower pace than we hoped, we think long term,’ he added.
HBC bought Kaufhof for €2.8 bn in 2015 from German retailer Metro.
