The furniture chain explained that it is now up to the insolvency administrator to make the decisions about whether and how things will continue. kika/Leiner management “did everything humanly possible to make sure the company always existed,” she said. Under the current conditions, “unfortunately it is not possible to restore the badly damaged furniture store,” explained the company, referring to the “general reluctance to buy” and the kika/Leiner brand ” which appears to have permanent damage”.
Signa’s bankruptcy has repeatedly prompted rumors and inquiries from customers whether it “affects them too”. “The cost increases in all areas, as well as the final collective bargaining negotiations, have kept the company’s creative freedom extremely limited,” the company said of its own financial situation. It is said to be a bankruptcy filing, reported “Der Standard” (online edition).
Graphics: APA/ORF; Source: Kika/Leiner
Trade unionists: “Don’t sign anything”
Specifically, according to information from the APA, the company was unable to ensure the payment of the next installment from the ongoing restructuring process, which is due on January 25 and represents a high single-digit million amount. Kika/Leiner had already filed for bankruptcy in June 2023 after taking over Rene Benkos Signa and receiving concessions from creditors for a restructuring process that would last until September 2025.
No new debt has been raised since the takeover, but the 30 million euro non-refundable landlord subsidy provided to the furniture retailer by the Supernova Group has now been used up. As the cover of the foreseeable liabilities was no longer secured, the application for insolvency was inevitable. So Kika/Leiner is moving from an ongoing restructuring process to the next insolvency.
In light of this, Michael Pieber, managing director of the Lower Austria trade union GPA, appealed to employees in a broadcast: “Don’t sign anything, don’t take any unauthorized steps, don’t quit. They may lose out on claims.” In the event of insolvency, the insolvency compensation fund would accept payment of outstanding claims.
The number of employees has already been reduced this year
Kika/Leiner has already reduced the number of employees from 1,900 to 1,400 during the year. The gradual reduction included about 500 unfilled positions, retirements and terminations, kikaLeiner’s spokesperson said in response to APA’s request in October, without giving further details - more about this in noe.ORF.at.
After the restructuring process was completed in the autumn of 2023, the furniture chain was looking to get out of the loss zone in the financial year 2023/24 (end of September). The “Oberösterreichische Nachrichten” (“OÖN”) reported in October that kika/Leiner remained in the red from October 2023 to September 2024.
Turbulent years
The furniture chain has been through turbulent times in the last decade: there have been three changes of ownership, one bankruptcy and numerous branch closures with job cuts. In 2013, South Africa’s Steinhoff Group acquired the local furniture giant from the then-owned Koch family.
At that time, kika/Leiner was the second largest furniture retailer in Austria after XXXLutz, with around 7,500 employees at 73 locations in Austria and Eastern Europe and sales of 1.2 billion euros. In 2018, Steinhoff sold the furniture chain in an emergency sale to the Signa Group led by Tyrolean investor Benko. The new owner sold the kika branches in Eastern Europe to XXXLutz.
Jobs cut, branches closed
In June 2023, Signa sold the kika/Leiner properties to Graz Supernova and the operational furniture business to trading manager Hermann Wieser. A little later, the furniture chain filed for bankruptcy. 23 out of 40 branches were closed at the end of July 2023 and over 1,600 jobs were cut. The restructuring process was canceled on 25 September 2023.
Creditors receive a total quota of 20 percent, payable within two years. kika owner/Leiner Wieser described the furniture chain as a long-term investment, company sources said in February. He had not yet publicly commented on his investment.
Interview between Time.news Editor and Furniture Industry Expert
Editor: Welcome to Time.news. Today, we have with us Dr. Anna Fischer, an expert in retail economics and sustainable business practices. Dr. Fischer, thank you for joining us.
Dr. Fischer: Thank you for having me. It’s a pleasure to be here.
Editor: Let’s dive right into the current situation with Kika/Leiner. The company’s recent move to file for insolvency has caught many off guard. What are your thoughts on the factors that led to this?
Dr. Fischer: There are several contributing factors at play. Primarily, the rising cost of materials, combined with a general reluctance to spend among consumers, has severely limited Kika/Leiner’s operational flexibility. The management mentioned that they “did everything humanly possible” to preserve the company, but ultimately, the financial pressures were too high to overcome.
Editor: It seems the brand itself has suffered significant damage. How might this affect its long-term viability?
Dr. Fischer: Brand perception is crucial in retail, and when a company faces bankruptcy, it often leads to a loss of consumer trust. Kika/Leiner’s brand, in particular, may have irreparable damage, which can result in decreased customer loyalty and market share. The management hinted at a permanent impact, which suggests that restoring consumer confidence will be a monumental challenge.
Editor: The company has also undergone substantial workforce reductions, down from 1,900 to 1,400 employees. What does this indicate about their restructuring efforts?
Dr. Fischer: This reduction indicates an acute response to financial strain. They have not only eliminated unfilled positions but also made terminations. While this may provide short-term cost relief, it can also affect employee morale significantly. Moreover, with such a large-scale layoff, the company risks losing valuable know-how and talent, which are difficult to replace.
Editor: Speaking of the workforce, trade union officials have warned employees against making any hasty decisions during this tumultuous time. Why is this advice so critical?
Dr. Fischer: Employees should tread carefully because resigning or signing any agreements without legal counsel could jeopardize their claims and benefits, especially concerning insolvency compensation. The threat of insolvency means that employees’ rights and entitlements may change, and understanding these implications is crucial for navigating the situation safely.
Editor: In light of these challenges, do you think there’s any chance for Kika/Leiner to rebound in the future?
Dr. Fischer: Rebounding is possible, but it will require a strategic overhaul. This includes redefining their market position, rebuilding brand credibility, and perhaps most importantly, innovating their product offerings to respond to changing consumer behaviors. A successful turnaround would likely also involve engaging employees and ensuring their participation in the recovery process, as they are key stakeholders.
Editor: Thank you for your insights, Dr. Fischer. As we navigate these uncertain waters in retail, your expertise sheds light on the complexities businesses face in crisis.
Dr. Fischer: Thank you for having me. I believe it’s important that we keep discussing these issues as they unfold, and I appreciate the platform.
Editor: We’ll certainly be watching closely as the story develops. Thank you again for your time.