Catholic Church-Owned German Bookseller Weltbild Files for Insolvency

The Reuters
January 10, 2014

http://in.reuters.com/article/2014/01/10/germany-weltbild-idINL6N0KK1BA20140110

Jan 10 (Reuters) - Roman Catholic Church-owned bookseller Weltbild, which competes with online retailer Amazon.com in Germany, filed for insolvency on Friday after its sales shrank and it unexpectedly found itself unable to obtain fresh financing.

Unlisted Weltbild, which has 6,800 employees, has been posting losses as it invests in a shift to more internet-based business.

The company, which relies on catalogue sales and is part owner of Germany's second biggest brick-and-mortar bookstore chain, has struggled to keep up with Amazon and its sales fell in the second half of 2013.

"The lower level of sales expected for the next three years as well doubles the amount of financing needed until the company is restructured," it said in a statement.

It said its business was to continue while the court-appointed insolvency administrator works out a plan to restructure the business.

Weltbild's insolvency filing, made with a court in the southern German city of Augsburg, does not affect the bookstores, Weltbild's businesses in Austria and Switzerland or its website buecher.de.

As recently as September, Weltbild denied that its financial future was uncertain, saying its management did not see the company's survival as being at risk.

But earlier on Friday, Handelsblatt Online said that the Roman Catholic groups that own the publisher had failed to agree on fresh financing.

The owners of Weltbild - 12 Catholic dioceses, the Association of German Dioceses and the church's soldiers' welfare organisation - have fought for years over their strategy for the company.

Two years ago, they even decided to prepare a sale of the for-profit business after accusations that Weltbild was making profits from selling erotic books, but no deal materialised.

Weltbild in 2012 generated sales of almost 1.6 billion euros ($2.1 billion) with mail-order sales of books and household items and from its part-owned bookstore chain Hugendubel.

Hugendubel is in turn part of Germany's No. 2 bookstore group after Thalia, which is owned by beauty-to-books retailer Douglas.

Amazon's online book sales alone in Germany bring in about the same amount as Weltbild's entire revenue, giving it a share of almost 75 percent of Germany's online book retailing market.