Migros Zurich takes the savings hammer to German subsidiary Tegut
Published: Thursday, Nov 14th 2024, 13:10
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Migros Zurich is cracking down on its German subsidiary Tegut: Job cuts, store sales and a change of management should finally bring the chronically loss-making supermarket chain back on track.
Sales and earnings at Tegut are inadequate, Migros Zurich announced on Thursday. The task now is to secure the future of the company. The German supermarket chain of Migros Zurich has been making losses for years.
As a consequence, the largest Migros cooperative is cutting 120 jobs at the Tegut headquarters in Fulda. This comes after costs there have risen significantly in recent years. According to Migros Zurich, the cutbacks should be as socially responsible as possible.
Migros Zurich is also significantly reducing its store network. According to the information provided, it is looking for a buyer for every tenth Tegut store.
There will also be a change in management. The previous Managing Director Thomas Gutberlet is leaving the company with immediate effect. The new management team now consists of Sven Kispalko, Head of Restructuring, Karl-Christian Bay, Head of Finance, and Robert Schweininger, Head of Operations.
Tense market situation
"We are convinced that these drastic measures are necessary to secure the future of Tegut and achieve robust results in the future," Patrik Pörtig, Managing Director of Migros Zurich, is quoted as saying.
Tegut has been suffering from a lack of profitability for some time. Both the current market situation and a possible expansion outside of Tegut's core area are currently proving to be challenging, according to the information provided. Recently, for example, Tegut had to put its expansion plans with the unmanned "Teo" stores on hold after the opening of the stores on Sundays was prohibited by court order.
In 2023, the supermarket chain generated sales of 1.28 billion euros in its 345 sales outlets. This was 2.4 percent more than in the previous year. The company did not disclose its profits. Tegut has a high proportion of organic products and has been part of Migros Zurich since 2012.
Migros under reconstruction
No stone is being left unturned at the Migros Cooperative Alliance, to which Migros Zurich belongs. Under Group CEO Mario Irminger, the "orange giant" introduced cost-cutting measures at the beginning of the year following a sharp drop in profits in 2023. This includes the reduction of around 1,500 of the total of around 100,000 jobs.
The Group also intends to focus on the four core areas of food, non-food, health and Migros Bank and divest itself of other subsidiaries. Migros has already found buyers for some specialist stores such as SportX, Bike World and Melectronics. Buyers are still being sought for other businesses such as Hotelplan and the cosmetics and hygiene subsidiary Mibelle.
However, the individual cooperatives such as Migros Zurich are themselves responsible for their subsidiaries.
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