Austrian property giant Signa finds itself entangled in insolvency challenges, with a senior executive, Alfred Gusenbauer, now acknowledging a costly misstep – the venture into the retail business. Gusenbauer, former leader of the Social Democrats and Austrian chancellor, revealed in a recent interview that this strategic move drained vital capital, intensifying the struggle to avert insolvency threats.
In November, Signa’s holding company, comprising around 1,000 entities and boasting high-profile projects and department stores across Germany, Austria, and Switzerland, filed for insolvency, carrying a staggering 5 billion euros ($5.5 billion) in debt. Various Signa units have since followed suit, marking a significant casualty in Europe’s turbulent property sector.
Gusenbauer cited a confluence of challenges, including the Covid-19 pandemic, the Ukraine conflict, rising inflation, and European Central Bank interest rate hikes, as contributors to the financial strain on the property market. The ill-fated foray into retail further exacerbated Signa’s cash shortage.
«I think venturing into retail was a mistake,» Gusenbauer admitted, underscoring the retail adventure’s hefty cost, exceeding a billion euros.
The repercussions extend to Signa’s German department store Galeria Karstadt Kaufhof, which recently filed for insolvency for the third time. Signa also divested Austrian furniture chain Kika/Leiner and its stake in the renowned British department store chain Selfridges. Additionally, Signa is a partial owner of the Swiss department store chain Globus.
Gusenbauer candidly acknowledged another setback – the bankruptcy of Signa Sports United, an online sports retail venture that drained approximately 800 million euros in cash.
As Signa grapples with insolvency, the admission of the retail misstep underscores the intricate challenges faced by major players in the European property sector. The aftermath of this strategic misjudgment continues to unfold, emphasizing the paramount importance of prudent business decisions in a dynamically evolving market environment.
