Retail slump hits German mail order icon

30 June 2009

BERLIN: Germany's recession-battered retail sector sank for the thirteenth consecutive month in June, at a time when Quelle, the catalogue company that for decades has supplied consumers with everything from white goods to underwear, has been forced to apply to both the federal and two state governments in the country for a loan.

The release of Bloomberg's purchasing manager's index, which dipped another 0.3% in May, came on top of news that Quelle has received a €50 million loan ($70m; £42m), or a "Massekredit", from the state, 50% of which came from the national government, with the state of Bavaria contributing €20.5m, and the state of Saxony a further €4.5m.

The Bavarian-based company employs some 8,000 people and, alongside the liquidation of its parent company Arcandor and the Karstadt department store group, it could end up as another high-profile casualty of the severe economic contraction gripping Germany.

The Bloomberg index, compiled by the research company Markit from a survey of 500 executives, reports that most retailers expect to miss their July sales, while the squeeze on margins continued through June.

Last week, the Ifo Institute in Munich said the German economy as a whole would shrink 6.3% this year, followed by unemployment reaching a four-year peak of 10.1% next year.

Data sourced from Bloomberg and Deutsche Welle; additional reporting by WARC staff