German retailer Douglas hopes to manage without state aid

Private-equity controlled German perfume retailer Douglas said on Wednesday it hopes to be able to make it through the coronavirus pandemic without state aid, even though it expects an ongoing hit to sales.

“We assume that the third quarter will continue to be significantly affected by the coronavirus,” finance chief Matthias Born told Reuters.

Sales in the second quarter of the 2019/20 fiscal year fell 9.9% to 656 million euros ($720.29 million) and the chain posted a net loss of 51 million euros.

Douglas had been talking to state-owned development bank KfW about a loan but discussions have been put on hold as it could not reach an agreement on conditions.

Born said KfW had set conditions that were difficult to fulfill, adding: “That’s why there’s a break in the talks.”

“We assume that we will be able to make it into the Christmas period without state support,” Born said, adding that Douglas is discussing extended payment terms with suppliers and trying to renegotiate store rental terms.

Douglas has expanded its online business in recent years and had posted strong sales in its first fiscal quarter and through to February, but was then forced to close almost all of its 2,400 stores across Europe in March.

Born said majority-owner financial investor CVC should not have to inject more capital.
The firm said earlier this month its chief executive Tina Mueller would be on medical leave for an unknown period.

People close to the matter told Reuters in February that majority owner CVC Capital Partners was exploring options to sell or list Douglas.

But an initial public offering of Douglas is currently off the agenda due to the turmoil the coronavirus has unleashed on markets.