Dealers in crisis: Tchibo cuts 300 jobs

DTraditional Hamburg coffee roaster Tschibo has fallen into a crisis and is responding with layoffs. 300 jobs will be cut. They will try to use mostly socially acceptable options, such as early retirement or not filling vacancies. “But we also cannot rule out layoffs for operational reasons,” a spokesman for Tchibo FAZ said.

Most positions will be cut in the Hamburg administration. The spokesperson confirmed that management wanted to inform affected employees by mid-July. First, “the world” reported it and indicated that it was the first major job cut since the turn of the millennium.

Tchibo currently has 7,100 employees in Germany and 11,200 worldwide. A Tchibo spokesman added that the job cuts would mean German workforce numbers would return to pre-coronavirus levels. The point is to bring the structure in line with the increased costs. “Everything went up: transportation costs, electricity costs, gas costs for the kiln plant…” The increase in costs could not be fully offset by higher prices.

Coffee accounts for half of sales

A few weeks before the start of the war with Ukraine, Tchibo heralded a collapse in prices in the coffee industry, with freight rates reaching record highs. Since then, the price of coffee at Tchibo has not risen again. Coffee accounts for about half of the turnover of just under 3.3 billion euros. The other half is generated by selling a changing range of consumer goods (non-food items) in the company’s own stores, online, but above all in some 24,000 so-called warehouses in grocery stores such as Edeka, Rewe or Kaufland.

Clearly, Tchibo is in serious trouble in the non-food business. As with other retailers, a lot was bought during Corona, on the one hand, to be prepared for the many delivery delays at that time, and also due to high demand. When inflation spiked very quickly last summer as a result of the gas crisis, and at the same time consumer spending plummeted, Cibo was increasingly left with clothes and kitchen utensils, exercise equipment or garden supplies, and he had to sell them at a discount.

Hertz family holding Maxingvest, which owns Tchibo, warned back in August that against this backdrop, Tchibo expects sales to be lower than the previous year’s level of 3.256 billion euros, with a significant decrease in earnings before interest and taxes (EBIT). In the previous year, the EBIT margin increased from 2.9 percent to 5.4 percent. Maxingvest will only talk in detail about how the business actually developed in August.

A week ago, the workforce received clear signals because there will be no regular pay increase this year. The Welt cites a letter to employees that said 2022 was “financially the worst year in the company’s nearly 75-year history.” The suspension of the pay round applies “both to directors and to all other employees.” However, a tax-free inflation adjustment is paid in the amount of 1,500 euros.

In the meantime, the company is working on a new strategy — after all, not only spending is to blame for the crisis, but also changing consumer behavior during and after the pandemic. Tchibo still has 550 branches in Germany (900 in Europe), but in the changing retail landscape, store management is becoming increasingly unprofitable.

Hamid Dastmalchyan, who took over as Managing Director of the Non-Food Products division a few days ago, has an important task to reorganize the business. He started his Cibo career in this division 17 years ago. The process engineer has had experience with Otto, Sport Scheck and Baur since the mid-1990s. The chairman of the board is 68-year-old former Ikea manager Werner Weber, who moved from the supervisory board to head Tchibo GmbH two years ago.

Source: Frantfurter Allgemeine

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