Stars from the United States have opted for closed-jeans fashion - now, the Hamburg-based denim brand, insolvent. - American celebrities sported denim pants - now, a well-known hamburger corporation is bankrupt
In 2023, the retail sector in Germany saw a significant increase in corporate insolvencies, with several well-known companies seeking protection from insolvency. According to Textilwirtschaft, a total of 102 textile retailers and manufacturers filed for insolvency last year.
One of the notable companies that had to seek protection from insolvency was Galeria. Other companies that followed suit include Peek & Cloppenburg and shoe retailer Reno. H&M, known for its global presence, has also been closing stores in recent years. The Hamburg fashion label Closed Jeans also filed for insolvency.
Several factors contributed to this rise in insolvencies. One of the primary reasons was excessive debt and financing costs. For instance, the premium denim label Closed cited excessive debt and associated financing burdens despite continuing profitability in core areas like e-commerce and retail stores.
Another factor was the failure of restructuring efforts. Fashion retailer Gerry Weber entered insolvency proceedings for the third time in six years, leading to the closure of all stores. Previous restructuring attempts failed, highlighting ongoing challenges in adapting to market conditions.
Cybersecurity incidents and operational disruptions also played a significant role. A ransomware attack in 2023 greatly impacted the Einhaus Group, a mobile phone insurance, repair, and logistics firm linked to retail operations. The attack encrypted critical business systems, leading to lost revenues in the millions, drastic staff reductions, and eventually insolvency proceedings for several company subsidiaries.
In recent months and years, Closed Jeans joins a string of prominent fashion, cosmetics, and iconic brands that have filed for insolvency, including Esprit, The Body Shop, and Tupperware. Other well-known companies that have filed for insolvency or sought protection from insolvency recently include Tupperware and KaDeWe.
The rise in insolvencies can also be attributed to acute economic difficulties related to inflation, energy prices, and high costs. The company behind Closed Jeans is seeking new investors to secure its future. Notably, Closed Jeans was previously worn by U.S. stars like Miley Cyrus, Brad Pitt, and Sarah Jessica Parker in "Sex and the City 2".
The insolvency filing obligation was temporarily suspended during the Corona crisis, but has since resumed. State aid measures from the Corona period have expired in Germany, contributing to some businesses' insolvencies. Some insolvencies during the Corona pandemic were merely postponed.
In summary, the 2023 insolvencies in German retail companies were influenced by a mix of financial burdens from high debt and costs, unsuccessful restructuring, and severe operational disruption from cyberattacks. These factors combined to put substantial pressure on profitability and liquidity, leading many companies to insolvency.
- The Commission, whilst addressing the increased corporate insolvencies in the retail sector last year, received a request from the Italian authorities for a reply to the request related to the industry, finance, and business aspects involved in these insolvencies.
- As the retail sector in Germany faced a wave of insolvencies, many prominent companies (such as H&M and Closed Jeans) from various sectors like fashion and finance not only filed for insolvency but also sought protection from insolvency, which has significant implications for the broader industry.
