German drugstore Schlecker's darkest hour
Meike Schlecker (38) also claimed that the family had invested a "three-figure million" sum in trying to restructure the business so that there was no longer "anything there" in terms of personal fortune for the insolvency administrators to claim. Our newspaper estimates that Schlecker has accrued losses of at least €250m ($328m) in Germany over the past four years.
Good on a daughter for speaking up for a father, but Schlecker is no longer a family affair. The man firmly in charge at the helm of the Ehingen-based drugstore empire is now temporary insolvency administrator Arndt Geiwitz.
It's Geiwitz's call now
He must decide by April at the latest whether Schlecker, whose main "Schlecker" format in Germany still counts around 6,000 outlets and estimated annual revenues of €3.8bn ($5bn), can be saved via insolvency administration. Geiwitz, a lawyer by trade, has already intimated that he and his team of twenty-two would like to come to a decision before then.
A first perusal of the business has not revealed any major business assets. Most of the stores are rented and many of the sites have already been sold. The book value of the head-office building and depots almost certainly far exceeds market worth.
As Geiwitz has pointed out, the Schlecker family's alleged inability to invest any "considerable personal fortune" in the business means that the group's survival will depend on external capital. "I am (prepared to) talk with any serious investor, but I am open to other ways of raising external and share capital. Think, for instance, of mezzanine capital."
In an interview with our newspaper, Geiwitz states that Anton Schlecker (67) would like to keep the company in family hands with his children, Meike and her older brother Lars (30), as managers. "However, any family solution must mean a better deal for creditors...," says Geiwitz.
As the administrators try to get to grips with the vast Schlecker empire, drugstore rivals are clearly ready to cherry pick. Dirk Roßmann, owner of Rossmann, would be interested in around 80 "Schlecker" and "Ihr Platz" outlets, and dm is said to be eyeing individual "Ihr Platz" and "Schlecker XL" stores.
On an international plane, it would be interesting to know whether Alliance Boots and Hutchison Whampoa subsidiary A.S. Watson Group are reviewing the dossier despite Germany's laws restricting the combination of pharmacies and drugstores. Meanwhile, Schlecker's ten foreign operations now resemble cut flowers in a vase.
According to sources within the trade, the Schlecker insolvency is also causing Germany food retail giants Edeka and Rewe to ponder anew their own deficits in the increasingly important health & beauty segment.
Finally, one must take issue with the unmistakable gloating in the German press when commenting Anton Schlecker's demise. The man's blunt way with staff and especially trade union members is generally portrayed as the inevitable cause of his downfall.
Schlecker's downfall is more attributable to a fixation with snowballing growth, however small the store, and a stubborn refusal to adapt to the times. The insight did come towards the end, but, sadly for his many staff, much too late.