Kika/Leiner Aims to Conclude with a “Black Zero”

Kika/Leiner Aims to Conclude with a “Black Zero”

The furniture chain kikaLeiner anticipates completion of its Remediation procedures by fall 2023, with operations reportedly on course. According to kikaLeiner manager Volker Hornsteiner, sales development is “satisfactory” and in line with the restructuring plan.

The new down payment protection aims to bolster customer confidence in making large purchases, such as kitchens. Customer funds are placed in an escrow account and released to the company upon delivery of the goods.

“Essential decisions” including reducing branches, streamlining the product range, and strengthening private brands have been made, says the co-managing director. Now, the focus is on customer needs. Prior to joining kikaLeiner, Hornsteiner spent 28 years with the Rewe Group, including a stint as Billa boss.

Inflation “continues to be a stumbling block”

Following the furniture industry’s boom during the Corona years of 2020 and 2021, high inflation, stricter home loan guidelines, and a construction recession have slowed down business. According to Statistics Austria, real retail sales of furniture, DIY supplies, and electrical goods in Austria dropped by 11.5 percent last year. Hornsteiner acknowledges that current inflation remains a hurdle, but notes that this is true across the entire industry. He mentions that customer reluctance to invest is due to the “uncertain economic situation”. However, with falling interest rates and inflation, “demand is expected to pick up”. The company is banking on its new discount private brand OHO! launching in April to provide a boost. The share of private brands is set to increase from 20 to 30 percent, with furniture brands like Team 7 and ADA, and kitchen brands like DAN and EWE still in the range.

For the 2022/23 fiscal year, the furniture chain’s sales were 597 million euros with an accumulated loss of 144 million euros, according to the recently published annual financial statements. kika and Leiner’s ranges have been aligned since the takeover last June, and the joint advertising slogan “Come closer!” was introduced last autumn.

Conservative restructuring plan

For 2023/24, Hornsteiner anticipates kikaLeiner’s sales to be between 300 and 400 million euros, with the branch network cut in half. He states that the restructuring plan was calculated very conservatively, so the company’s key data is within the scope of its set goals. This year, Hornsteiner aims to “further stabilize the organization” and “end the financial year in September with a black zero”.

In the past decade, the kikaLeiner furniture chain has faced numerous challenges, including three changes of ownership, one bankruptcy, and several branch closures accompanied by staff cuts. In 2013, the South African Steinhoff Group bought the local furniture giant from the Koch family. At that time, kikaLeiner was Austria’s second-largest furniture retailer after XXXLutz, boasting about 7,500 employees across 73 locations in Austria and Eastern Europe, and a turnover of 1.2 billion euros. In 2018, Steinhoff sold the furniture chain to the Signa Group, led by Tyrolean investor Rene Benko, in an emergency sale. The new owner then sold the kika branches in Eastern Europe to XXXLutz.

In June 2023, Signa unexpectedly sold the kikaLeiner real estate to Graz Supernova and the operational furniture business to trading manager Hermann Wieser. Shortly after, the furniture chain declared bankruptcy. By the end of July 2023, 23 out of 40 branches were closed, and over 1,600 jobs were cut. The branch network will not be further reduced; the company currently has around 1,900 employees. The restructuring process was terminated on September 25, 2023. Creditors will receive a total quota of 20 percent, payable within two years.

The new kikaLeiner owner, Wieser, views the furniture chain as a long-term investment, but generally refrains from public commentary. “The equity capital is secured for the next few years,” emphasized co-managing director Hornsteiner. The Supernova Group has provided the furniture retailer with a non-repayable landlord subsidy of EUR 30 million.