Schlecker to sell foreign business

Works council chiefs and unionists are closely observing developments at Schlecker as the German drugstore chain revealed plans to sell its international business.

Schlecker officials announced yesterday (Mon) they wanted to put the firm’s foreign activities for sale to ensure meeting creditors’ demands. The Ehingen-based enterprise started controlled insolvency procedures last month. Schlecker, which runs 7,000 stores in Germany, experienced increasing difficulties in defending its market share against several prospering rivals.

Schlecker’s international business branches are officially not affected by the bankruptcy. Reports have it that the firm did much better in Austria in recent years than in Germany. Around 3,000 employees currently work at Schlecker’s 970 branches in the country. Most of them are women. Drugstore business top dog Bipa and rival DM are allegedly not interested in buying a large number of Schlecker shops to turn them into own stores due to the bad location of most of them.

There are 560 Bipa stores in Austria. The company is part of Rewe International which manages the foreign operations of the German Rewe Group. Bipa dominates the Austrian market for shops offering cosmetics, household products and pet food. However, its German competitor DM is also performing well in the country. DM reportedly managed to increase its market share in Austria in recent years by following Bipa’s example of concentrating on stores situated in excellent locations in busy streets or popular malls. Both companies focus on high service quality and a wide range of products while Schlecker is known for low prices – and low salaries.

Meike Schlecker said yesterday it was not true that her family, which owns the company, were still wealthy. Speaking about their assets, the businesswoman said: “There is nothing left.” Schlecker stressed that they had invested millions of Euros of private assets into the enterprise over the years. She denied claims that her family ensured stashing money in private accounts and foundations in time to protect it from creditors before declaring the company bankrupt.

News that the jobs of 3,000 Schlecker staff in Austria may be at risk comes shortly after warnings by economists that the difficult situation of the European economy could negatively affect the domestic labour market. The Viennese Institute for Economic Research (WIFO) and the Institute for Advanced Studies (IHS) said last month they expected the Austrian unemployment rate to rise slightly in 2012. A stagnation or mild recession of the domestic economy was possible to occur this year, they said, adding that things were looking much better for 2013 – given that Europe’s state and government leaders manage avoiding a collapse of the Eurozone.

Austria had the lowest jobless rate in the European Union (EU) in 2011, according to Eurostat, the European Commission’s (EC) statistics agency. Just four per cent of Austrians were unemployed last year, the organisation said. At the same time, the number of residents of the country who had work rose to 3.42 million. Social Democratic (SPÖ) Labour Minister Rudolf Hundstorfer said this was a new record. Hundstorfer promised to keep concentrating on fighting steadily high unemployment among elderly people, foreigners, women, poorly-skilled workers and teenagers.

Hundstorfer, who is part of a government coalition of SPÖ and the People’s Party (ÖVP), is under fire for failing to reform the Labour Market Service’s (AMS) system of education courses for unemployed people. The opposition claims that the lectures and traineeships are expensive and inefficient while the labour minister described them as a reasonable measure in periods of crisis. He claimed that statistics confirmed him in continuing to cooperate with the AMS over organising the courses. The classes aim at people who lost their job a long time ago.