German premium fashion retailer Breuninger looking for a Buyer
The German premium fashion retail chain Breuninger is on sale, according to an article in the German economic newspaper Wirtschaftswoche. The assessment phase for a sale has allegedly been running since June; 31 companies are interested, among them international competitors such as El Corte Inglés or Galeries Lafayette. Even Amazon is on the list of interested parties, Wirtschaftswoche reports.
It is still unclear if the complete Breuninger Group will be sold to one buyer or if parts of the company, such as the offline retail business, the online business which also features a vibrant marketplace or the pure real estates will go to separate buyers.
Company valuation reveales problems underneath
The most shocking part of the story are the reported figures: Experts speculate that in the negotiations the complete Breuninger Group is being valued at round about 2,5 billion Euro, with the real estates taking the biggest part of the pie with a value of 1,8 billion Euro. Considering the existing debts, Breuninger could be sold for around 2 billion Euro.
So that means that Breuninger’s complete retail business with a turnover of roundabout 1.4 billion Euro in 2022, with an e-commerce percentage of over 50 percent and a well-established marketplace business is only considered with 700 Million Euro – which roughly corresponds to Breuninger’s online GMV. What about the brick-and-mortar business?
What will happen to Breuninger?
Fashion retail chains are struggling all over the industry, especially in Germany. The last 12 months alone have seen the insolvencies of Esprit, Peek & Cloppenburg, Hallhuber Klingel, Galeria and many other fashion players. But Breuninger seemed to manage its digitalization process rather well in comparison to its competitors. The retail chained pushed its e-commerce percentage every year to over 50 per cent in 2022, and the marketplace has become one of the key players in the German premium fashion market, the clear nummer 2 behind Zalando.
So what will happen to these assets? Much will depend on the designated buyer. Will they take over the whole Breuninger group? Then it’s very likely that many brick-and-mortar stores will be closed to push profitability. Or will the group be split up? Then competitors like El Corte Inglès or Galaries Lafayette could push their own online business with the good work the Breuninger e-commerce team has done in the last years.