Retail: Discounter Kodi has to save itself under protective cover

The wave of insolvencies in German retail continues. This time affected: the non-food discounter Kodi. The retailer, which currently has 238 branches and an online shop, has applied for so-called protective shield proceedings at the district court in Duisburg. This special type of insolvency is possible for companies that are threatened with over-indebtedness but are currently still liquid. There must also be a positive continuation forecast.

The imbalance at Kodi is explained by the “significant reluctance” of consumers to purchase. Managing director Matthias Schob reports a “massive loss of sales in an already tough competitive situation”. At the same time, increased costs for energy, freight and advertising would burden the company.

The goal is now to develop a restructuring plan by spring 2025 that will get Kodi back into the black. “There are already promising approaches that we will now finalize,” says Schob. The management remains in office during protective shield proceedings and is supported by restructuring experts, in this case Holger Rhode and Raul Taras from the Görg law firm and Thomas Montag from Montag & Montag.

Kodi – the name is made up of the first letters of founder Karl Koch and the term discount – has been under pressure for many months. In the spring, the product range was streamlined and individual branches were closed. In addition, the owner family was reportedly looking for an investor, but discussions remained unsuccessful.

Experts predict a wave of consolidation

Founded in 1981, Kodi Diskontladen GmbH primarily sells products from areas such as cleaning, cooking, decorating, DIY and textiles. However, the competition in this segment is now fierce. Experts have therefore already predicted difficult times for the industry at the end of 2023. “The discounters that don’t sell food are coming under increasing pressure,” was the statement at the time by Frank Liebold, the Germany boss of the credit insurer Atradius. “And only the large market participants with the corresponding purchasing power will be able to survive in the market.” His forecast: “We expect a wave of consolidation among non-food discounters in the medium term.”

This predicted wave has now hit Kodi. The problem facing the company with branches in North Rhine-Westphalia, Hesse, Baden-Württemberg, Bavaria and Hamburg is not just falling sales and rising costs. Competitive pressure has also increased further in recent months and years. In addition to Tedi, Thomas Philipps, Woolworth, Pfennigpfeifer and Co., foreign providers have established themselves and expanded rapidly in Germany, especially the Dutch company Action and the Polish provider Pepco.

And the Chinese low-cost platform Temu, with its hundreds of thousands of packages delivered to Germany every day, is also putting pressure on the industry. All of this is intensifying the fight for customers and market shares, according to Atradius. “The cake is not getting bigger, but rather has to be distributed among more providers,” explains expert Liebold. “We estimate that in the end there may only be a handful of providers left.”

Wages are secured

Meanwhile, sales in Kodi’s branches continue without restrictions. The wages and salaries of around 1,800 employees are initially secured through insolvency money. In 2023, the company from Oberhausen said its sales were around 130 million euros. A year earlier, according to the entry in the Federal Gazette, it was 146 million euros. The bottom line was an after-tax loss of 5.3 million euros.

Kodi is not the only medium-sized non-food retailer that has currently taken refuge under the protective umbrella. The Gries Deco Company with its chain Depot is also in such insolvency proceedings. The family business is now closing every eleventh branch in Germany. 28 locations will be given up by the end of the year, managing director and founder’s grandson Christian Gries recently announced to WELT. That leaves 285 stores. “There was no longer any possibility of operating these branches and depots profitably.” Around 80 percent of the affected employees will be transferred to other branches as a result. A total of 50 employees lose their jobs.