KarstadtQuelle draws up plans to return to profit

Struggling German department store and mail order retailer KarstadtQuelle is thought to be planning to shut up to 30 stores and make almost 4,000 redundancies in an effort to turn the business around.

The group's new chief executive, Christoph Achenbach, is understood to have called an emergency managers' meeting to outline his plans.

The retailer is believed to be operating a sizeable number of its 180 Karstadt shops and warehouse outlets at a loss. The management team has been ordered by Thomas Middelhoff, who took over as supervisory board chairman earlier this month, to conduct a financial review, and hopes to return the business to profitability next year. Achenbach is expected to announce his overhaul plans in August.

A Karstadt spokesman is reported to have denied store closures are imminent, but confirmed that the management is holding cost-cutting negotiations and some job losses are likely.

Having appointed a supervisory board chairman and chief executive in recent weeks, the troubled retailer has dismissed three members from the board of its department store arm KarstadtWarenhaus.

KarstadtQuelle made an EBTA loss of EUR171 million (£115 million) in the last financial quarter, equivalent to a EUR23 million (£15 million) decline on the previous year's loss of EUR148 million (£99 million).

Separately, KarstadtQuelle has signed an agreement with German food retailer and wholesaler Rewe to operate the grocery sections in 72 of its department stores. The joint venture will begin in January.