Schlecker insolvency

German drugstore chain Schlecker said Friday it was filing for bankruptcy protection after negotiations for interim financing of the company's operations failed.

"The insolvency will be formally requested shortly," a company statement said.

Schlecker, which has roughly 7,500 branches and 11,000 employees in Germany, has come under heavy criticism for poor management practices and outdated stores in recent years.

By seeking bankruptcy protection from its creditors, Schlecker hopes to push through a restructuring plan aimed at making the chain competitive again.

"The ultimate goal of the insolvency is to maintain a large part of our stores, and as many jobs as possible," the company said.

Image overhaul

In 2011, Schlecker announced the closure of between 800 and 1,000 branches, saying that was part of a strategy to improve the company's performance and improve its image.

The move came after accusations had emerged that the company kept secret lists of poorly performing employees it wanted to fire.

Unions have also complained of a negative work environment, where employees are underpaid and disparaged by managers.

"We have certainly made mistakes and cannot turn things around overnight," Lars Schlecker, the son of the firm's founder, Anton Schlecker, and the company' chief executive told reporters in 2011.

Cutthroat competition

Schlecker has been facing intense competition from other drugstore chains in a market where profit margins have been dwindling for years.

The insolvency "doesn't come unexpectedly," Dirk Rossmann from rival drugstore company Rossmann told German news agency dpa on Friday.

"It's a catastrophe for both the employees, as well as for the owner family, whom I've known for 35 years," he said.

However, insolvency procedures have not yet been officially set in motion. "We haven't yet received a formal request for bankruptcy protection from Schlecker," a spokesman for the district court in Ulm said.

Author: Uwe Hessler (dpa, AFP)
Editor: Andrew Bowen