Gerry Weber International files for insolvency
Gerry Weber International, the parent company of German clothing brands including Gerry Weber and Hallhuber, has filed for insolvency in Bielefeld’s bankruptcy court in a bid to restructure the business.
Shares in the company fell 75% on Friday after the announcement .
The company said it applied for insolvency in self-administration, meaning that its managing board will remain in office with all powers and responsibilities following the court’s approval.
The insolvency proceedings put about 580 jobs at Gerry Weber International at risk of redundancy. The firm’s subsidiaries, including Hallhuber and Samoon, will not be affected, the firm reassured on Friday, adding that operations will continue as usual throughout the insolvency process.
Hit by declining sales and mounting losses, Gerry Weber has struggled to turn around the business despite significant efforts. It was forced to file for insolvency after failing to secure a deal with its creditors, however it said it has enough money to continue trading until 2020.
The company will now attempt to cut more costs and restructure the business to avoid disappearing from the market. In the past few months, Gerry Weber discontinued its Talkabout brand, cut over 200 jobs in Germany and abroad and earmarked up to 200 stores for closure.
Earlier in January, the firm also revised its forecast, revealing that its full-year pre-tax losses will widen to more than €192 million in the current financial year due in part to issues with its Hallhuber brand.
The clothing group’s declining performance is a result of several factors, including the consumer shift to online shopping and the increasing competition from fast-fashion, trend-led rivals such as H&M and Inditex. The tough conditions in the German retail market have also hit similar labels including Esprit and Tom Tailor, as consumer spending on clothing remains flat.
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