Arcandor

Arcandor AG was a German holding company headquartered in Essen that brought together department stores, mail-order businesses, online shopping activities and tourism services. It was created in 1999 when Karstadt Warenhaus AG merged with Quelle AG, two businesses with roots in the German retail sector. The combined group inherited Karstadt’s department-store network and Quelle’s large catalogue and distance-selling operation, while also developing a portfolio of specialist retailers, financial services and travel interests. The company’s retail heritage extended well beyond the Arcandor name. Rudolph Karstadt opened his first fabric and ready-to-wear shop in Wismar in 1881, expanded through northern Germany and converted the business into a joint-stock company in 1920. Quelle was established in 1927 by Gustav Schickedanz and became one of Germany’s most prominent mail-order companies. Both predecessor businesses expanded through acquisitions, including Karstadt’s purchase of Neckermann Versand in 1984 and its acquisition of Hertie in 1994. Hertie brought important department-store properties into the group, including Berlin’s Kaufhaus des Westens, commonly known as KaDeWe. Following the 1999 merger, the company initially operated as KarstadtQuelle AG. On 1 July 2007 it adopted the Arcandor name in an effort to present the group as a broader retail, services and tourism organization rather than simply a department-store and catalogue business. Its portfolio included Karstadt and related department-store formats, KarstadtSport, Quelle, neckermann.de, specialist mail-order businesses, customer-loyalty and information-services operations, and tourism assets. Arcandor also held a 52 percent interest in the Thomas Cook Group, making travel a central part of its business structure. The group’s business model became increasingly exposed to high fixed costs and financial pressure. In the department-store division, Arcandor had sold properties and leased them back, leaving the operating businesses responsible for substantial rental obligations. The global financial crisis intensified the company’s liquidity problems. In 2009 Arcandor sought government assistance, including loan guarantees, but its request was rejected. The company announced in June that it could no longer meet rent payments on its department stores and filed for insolvency protection shortly afterward. The insolvency led to a break-up of the group. Creditor banks sold Arcandor’s interest in Thomas Cook in September 2009. Administrators decided in October 2009 to liquidate the Quelle mail-order operation after efforts to find a buyer failed. The Karstadt department-store business continued separately and was acquired by investor Nicolas Berggruen in 2010. Arcandor therefore ceased to function as an integrated retail and tourism group, although several of its former operating businesses and brands continued under new ownership. The group’s corporate history is also connected to the difficult legacy of German retail during the Nazi period. Businesses later associated with KarstadtQuelle expanded during the forced transfer, or Aryanization, of enterprises owned by Jewish families. The history of Quelle likewise includes Gustav Schickedanz’s membership in the Nazi Party and the acquisition of assets from Jewish owners. These issues form part of the historical record of the predecessor companies rather than a separate operating phase of the Arcandor brand. Arcandor’s final years were defined by restructuring, attempted state support, insolvency proceedings and the disposal of its principal assets.

Arcandor was the final corporate identity of a retail group assembled from two major German businesses: Karstadt and Quelle. Karstadt began in 1881, when Rudolph Karstadt opened a textile, manufacturing-goods and ready-to-wear shop in Wismar. A second outlet followed in Lübeck, and the chain expanded across northern Germany. The enterprise became a joint-stock company in 1920. Quelle was founded in 1927 by Gustav Schickedanz and developed into a major mail-order business. The histories of both companies include serious issues from the Nazi era. Department-store companies owned by Jewish families, including the Tietz and Wertheim businesses, were subjected to forced transfers to non-Jewish owners. Companies later connected with KarstadtQuelle acquired businesses and property during this period. Quelle’s founder Gustav Schickedanz joined the Nazi Party and benefited from acquisitions involving Jewish-owned assets. After the Second World War, his property was confiscated, he was barred from professional activity during denazification and was sentenced to imprisonment with labour. Quelle’s postwar business was rebuilt during and after this period, with management assistance from his sister and wife. Karstadt expanded through acquisitions in the postwar retail market. In 1984 it acquired Neckermann Versand, adding a substantial mail-order operation. In 1994 it acquired Hertie, which included the prominent KaDeWe department store in Berlin. Karstadt and Quelle merged in 1999, creating KarstadtQuelle AG. The new group combined physical department stores, catalogue commerce, specialist retail and service businesses. Its portfolio later included Karstadt, KaDeWe, Wertheim, Alsterhaus, Oberpollinger, KarstadtSport, Quelle, neckermann.de, several specialist mail-order brands, KarstadtQuelle Bank, loyalty-program operations and tourism interests. In 2007 the company changed its name to Arcandor AG. The rebranding accompanied an attempt to manage the group as a broad consumer-services holding company. Tourism became particularly important through its majority holding in Thomas Cook Group, while department stores and distance selling remained exposed to intense competition and high operating costs. Arcandor’s financial structure deteriorated in the late 2000s. The company had sold and leasebacked department-store properties, which reduced direct property ownership but created substantial rental commitments. During the global financial crisis, the group sought government loan guarantees and other assistance. The European Commission rejected the proposed aid on 3 June 2009. On 6 June Arcandor stated that it could no longer pay rent on its stores, and on 9 June it filed for bankruptcy protection. The insolvency administrators dismantled the group. Arcandor’s holding in Thomas Cook was sold by creditor banks in September 2009. The Quelle mail-order business was liquidated in October after no buyer could be found. The Karstadt operation survived separately and was purchased by Nicolas Berggruen in September 2010. Arcandor itself therefore became defunct, while parts of its former portfolio continued under independent ownership. The company’s final history combines the consolidation of traditional German retail, the attempted integration of department stores and distance commerce, expansion into tourism, financial distress and a disorderly breakup during the financial crisis.

1. 2010Karstadt is sold separately

   Investor Nicolas Berggruen acquired the Karstadt business after Arcandor’s group-wide insolvency.

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2. 2009Arcandor enters insolvency

   After emergency support was rejected and rental obligations could not be met, Arcandor filed for bankruptcy protection in June.

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3. 2007KarstadtQuelle adopts the Arcandor name

   The company was renamed Arcandor AG on 1 July as it repositioned itself as a broader retail, services and tourism group.

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4. 1999Karstadt and Quelle merge

   Karstadt Warenhaus AG and Quelle AG merged to form KarstadtQuelle AG.

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5. 1994Karstadt acquires Hertie

   The transaction brought Hertie’s department stores, including KaDeWe, into the wider Karstadt group.

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6. 1984Karstadt acquires Neckermann Versand

   The acquisition expanded Karstadt’s presence in catalogue and distance selling.

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7. 1927Quelle is founded

   Gustav Schickedanz founded Quelle, which later became one of the group’s principal mail-order businesses.

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8. 1920Karstadt becomes a joint-stock company

   The Karstadt business was converted into a joint-stock company after expanding to multiple northern German locations.

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9. 1881Rudolph Karstadt opens his first store

   Rudolph Karstadt opened a textile and ready-to-wear shop in Wismar, establishing the retail lineage that later became part of Arcandor.

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A large, diversified German retail and tourism group combining department stores, catalogue and online commerce, specialty retail and travel services.

• KarstadtDepartment stores

  Karstadt was Arcandor’s principal department-store business, operating large general-merchandise locations in Germany. The format sold apparel, household goods, consumer products and other retail categories. Several prestigious properties, including the Frankfurt department store and stores associated with the former Hertie portfolio, represented the group’s physical retail presence. The business continued separately after Arcandor’s insolvency and was acquired by Nicolas Berggruen in 2010.

• KaDeWeLuxury department store

  Kaufhaus des Westens, commonly called KaDeWe, was Berlin’s best-known department store and the largest store in the Arcandor retail portfolio. It entered the group through Karstadt’s 1994 acquisition of Hertie. KaDeWe gave Arcandor a prominent premium-retail asset and an internationally recognized Berlin location, although it was one of the historical properties whose ownership and operation changed after the group’s collapse.

• QuelleMail-order retail1927

  Quelle was the group’s major catalogue and distance-selling business. It offered a broad assortment through mail-order channels and later participated in the transition toward internet commerce. The business originated in 1927 and formed one of the two foundations of KarstadtQuelle. Administrators liquidated Quelle in 2009 after efforts to identify a buyer were unsuccessful.

• neckermann.deOnline and mail-order retail

  neckermann.de was the group’s internet and distance-commerce operation associated with Neckermann Versand, which Karstadt acquired in 1984. It represented Arcandor’s attempt to maintain a presence in general merchandise through digital and catalogue channels alongside Quelle and its specialist mail-order businesses.

• Thomas Cook GroupTourism services

  Arcandor held a 52 percent interest in Thomas Cook Group, making tourism one of its principal operating and investment areas. Thomas Cook connected the group to package holidays and broader travel services, diversifying Arcandor beyond German retail. The holding was sold by creditor banks during Arcandor’s 2009 insolvency proceedings.

• KarstadtSportSpecialty retail

  KarstadtSport was the group’s specialist athletic-equipment retail format. It complemented the general department stores with a more focused assortment of sporting goods and related equipment, illustrating Arcandor’s strategy of combining broad retail formats with category-specific outlets.

• 2009Seek government-backed financingStrategy

  Arcandor faced severe liquidity pressure, including rent obligations arising from the sale-and-leaseback structure used for department-store properties.

  What changed. The company requested government loan guarantees and related financial assistance, but the request was rejected.

  Aftermath. Arcandor announced that it could no longer pay department-store rents and filed for bankruptcy protection in June 2009.

  Requested loan guarantees. (2009)

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• 2009Dispose of Thomas Cook holdingM&A

  Following Arcandor’s insolvency, creditor banks controlled the disposition of important group assets.

  What changed. The creditor banks sold Arcandor’s majority holding in Thomas Cook Group.

  Aftermath. The sale separated the tourism investment from the failed Arcandor holding company.

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• 2009Liquidate QuelleOther

  Administrators were unable to find a buyer for the Quelle mail-order operation during the insolvency process.

  What changed. They chose to liquidate the Quelle business in October 2009.

  Aftermath. Quelle ceased operating as an Arcandor business, while the group’s remaining assets were handled separately.

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• 2007Rebrand KarstadtQuelle as ArcandorStrategy

  The company sought to present its department stores, mail-order operations, online commerce and tourism interests as a unified consumer-services group.

  What changed. KarstadtQuelle AG changed its corporate name to Arcandor AG on 1 July 2007.

  Aftermath. The new identity did not prevent mounting liquidity problems, and the group entered insolvency in 2009.

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• 2009Investigation into possible breach of trustControversy

  Investigations began into possible breach-of-trust offenses involving former Arcandor chief executive Thomas Middelhoff. The inquiry occurred during the company’s severe financial distress and insolvency process.

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• 1933Aryanization involving predecessor businessesControversy

  The histories of businesses later incorporated into KarstadtQuelle and Arcandor include acquisitions and property transfers connected to the Nazi regime’s forced expropriation of Jewish-owned enterprises. This is a historical issue concerning predecessor companies and their owners, not an Arcandor-era operating event.

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• 2010Karstadt business acquired by Nicolas Berggruen

  The Karstadt department-store business was acquired by investor Nicolas Berggruen as part of an effort to preserve the operation after Arcandor’s insolvency.

  M&ABankruptcy
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• 2009Arcandor requests German government assistance

  Arcandor sought loan guarantees and other financial support as liquidity problems threatened its department-store and mail-order operations. The request was rejected, contributing to the company’s insolvency.

  BankruptcyRegulation
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• 2009European Commission rejects proposed Arcandor aid

  The European Commission rejected the requested assistance on 3 June 2009, removing a potential route for emergency support.

  RegulationBankruptcy
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• 2009Arcandor announces it cannot pay department-store rents

  After selling and leasing back department-store properties, Arcandor announced that it was unable to meet the related rental obligations.

  BankruptcyOther
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• 2009Arcandor files for insolvency protection

  Arcandor filed for bankruptcy protection on 9 June 2009 after emergency financing efforts failed.

  Bankruptcy
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• 2009Arcandor sells its Thomas Cook holding

  Creditor banks sold Arcandor’s 52 percent interest in the Thomas Cook Group during the insolvency process.

  M&ABankruptcy
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• 2009Quelle mail-order business is liquidated

  Administrators chose to liquidate Quelle after unsuccessful attempts to secure a buyer for the mail-order business.

  BankruptcyOther
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1. Arcandor