Gerry Weber grabs broke rival

A German fashion firm has taken over bankrupt clothing business Don Gil.

It was confirmed yesterday (Weds) that Gerry Weber snatched up Don Gil for around six million Euros. The Austrian company – run by an Italian enterprise – opted for a controlled bankruptcy procedure last month due to its debts of 28 million Euros. Austrian and Arabian investors were also interested in acquiring the firm before insolvency proceeding decision-makers opted for Gerry Weber.

The Halle-based company, which was founded in 1973, plans to expand in Austria. It currently has 23 shops in the alpine country. The purchase of Don Gil increased the figure to 52. Reports have it that the bidding war for Don Gil intensified in the past days especially due to its branches in the heart of Vienna. It remains uncertain whether Gerry Weber will keep Don Gil alive as a brand. However, the German company is expected to start selling its own product range in Don Gil stores located in exclusive areas shortly.

Don Gil managers decided to declare the business bankrupt after having hoped for months for fresh capital from its Italian parent company. Don Gil has 370 employees. Experts have said it was unlikely that Gerry Weber – which is represented in 62 countries – would make them redundant. The German fashion industry giant achieved a net profit of 54 million Euros in the 2009/2010 business year. Gerry Weber, which has around 2,700 employees, recently opened new shops in Austria, Spain, Denmark and Poland. Around 200 creditors would have been affected had bankruptcy procedure operators failed to find an investor for Don Gil which had a turnover of 63 million Euros last year.

There were 4,645 business bankruptcies in Austria between January and September, down by six per cent compared to the first nine months of 2010. Creditors’ protection institution Creditreform said, with 36.8 per cent, Vorarlberg recorded the most significant decline. It added that, among Austria’s nine provinces, Styria was the only one which suffered an increase (plus 4.7 per cent).

The number of private bankruptcies rose at the same time. The Creditors’ Protection Association of 1870 (KSV) announced that 7,353 residents of Austria went bust in the first nine months of 2011. This was a rise of 8.2 per cent compared to the first three quarters of the previous year, according to KSV.

Meanwhile, the head of Europe’s biggest shopping centre has said he is “cautiously optimistic” about this year’s Christmas shopping business. Shopping City Süd (SCS) boss Anton Cech told the Kurier additional free of charge buses operating between Vienna and the supersize mall should ensure high activity in the coming weeks. Cech – whose shopping centre is located just south of Vienna – claimed that the financial crisis and climbing car fuel prices may negatively affect shoppers’ investment value.

There are more than 200 shopping centres in Austria after new malls opened in Vienna-Liesing (Riverside) and the Upper Austrian town of Vöcklabruck (Varena). Around 69,000 people work in the 7,500 shops which can be found in Austria’s shopping centres. Representatives of the retail trade sector are currently holding salary negotiations with company bosses. The retail trade has half a million staff. Its turnover slid slightly in the first half of the year, according to research. Shops’ annual performance strongly depends on how they fare in the coming weeks which are traditionally the busiest period for most branches of the industry due to Christmas.

Austrians interviewed by consulting company Ernst & Young said they would spend 277 Euros on gifts this year. Another survey – carried out by the Viennese Economy Chamber (WKW) – showed that residents of the capital intended to buy eight presents on average this year, one more than in 2010. WKW President Brigitte Jank explained the city’s retail trade may achieve a Christmas business turnover of 365 million Euros. “This would be a moderate increase of 1.5 per cent compared to last year,” she said.

Austrians’ willingness to generously shop for Christmas gifts may wane considering pessimistic predictions by economists. Institute for Economic Research (WIFO) expert Marcus Scheiblecker said the domestic economy could stagnate in the remaining weeks of this year and at the beginning of 2012. He predicted a similar development for the domestic economy of Germany, Austria’s key export and import partner.

The Austrian gross domestic product (GDP) increased by 2.6 per cent from the third quarter of 2010 to the same period of the current year, but only by 0.3 per cent from the second quarter of 2011 to the next quarter of the same year. Germany’s GDP also leapt by 2.6 per cent.