Germany’s Adler not worried over Steilmann's insolvency

Wednesday was a dark day for Steilmann. Only five months after its IPO, the fashion company is illiquid. After restructuring negotiations failed, the company’s management board announced it will file for insolvency. On the stock market the value of Steilmann shares plummeted by more than 80% 

According to its own data, the Germany-based company has over 8,300 employees across its several businesses, which cover the entire value chain of the fashion industry. Its brands target the 45+ market and retail in 18 countries – however Germany is the group’s main market. Among its brands is Adler, a fashion chain with 179 stores in Germany whose majority of shares is owned by Steilmann and private equity firm Equinox.

However Adler expects its financial strength not to be affected by its majority shareholder’s bankruptcy. The retailer said on Thursday it does not have intercompany agreements with Steilmann and that it has more than sufficient liquidity.

Steilmann went public in November 2015 but its high hopes were met with disappointment. The retail group had to reduce the number of placed shares from 19.5 million to 2.5 million and their price remained at the lowest end of the range.

The fact that the company is insolvent only a few months after the IPO raises a flag to Germany’s financial watchdog Schutzvereinigung für Wertpapierbesitz. "We will examine whether this is a case for prosecution. Perhaps the situation prior to the IPO was worse than disclosed,” said the institution’s chief executive Marc Tüngler to DPA. For shareholders and investors is the insolvency a “pure catastrophe”.

In December Steilmann shocked the market with a profit warning, blaming the unusually warm weather for its poor sales.