VIENNA (Reuters) - It was a mistake for Austrian property group Signa to venture into the retail business, since that cost it capital that was sorely missing when it tried to stave off insolvency, executive Alfred Gusenbauer said in comments broadcast on Saturday.
Gusenbauer, a former leader of the Social Democrats and Austrian chancellor, was one of the most senior executives in the complex constellation of around 1,000 companies that make up Signa, the biggest casualty so far of the woes afflicting Europe's property sector.
Signa's holding company filed for insolvency in November with around 5 billion euros ($5.5 billion) in debt. Various units have since followed suit. Signa has high-profile projects and department stores across Germany, Austria and Switzerland.
"I think venturing into retail was a mistake," Gusenbauer told ORF radio in an interview. He is supervisory board chairman of the heavyweight Signa Prime Selection and Signa Development divisions and was on the recently dissolved group advisory board of Signa Holding that included Signa's founder Rene Benko.
He pointed to issues such as the COVID-19 pandemic, the war in Ukraine, rampant inflation and the European Central Bank's interest rate increases as having hurt the property market and contributed to its cash shortage.
"The changes in the market environment led to an acceleration of a situation that would have required additional capital. Unfortunately, that was not available as Signa had embarked on this retail adventure, which cost us more than a billion euros," Gusenbauer said.
Signa's German department store Galeria Karstadt Kaufhof filed for insolvency this week for the third time in recent years. Signa also recently sold Austrian furniture chain Kika/Leiner and its stake in department store chain Selfridges in Britain.
It is also part-owner of Swiss department store chain Globus.
"You haven't mentioned the biggest bankruptcy in that context. That was Signa Sports United," Gusenbauer added, referring to an online sports retail venture which he said had cost Signa "roughly 800 million euros in cash".
($1 = 0.9133 euros)