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Business

The rise and fall of the Schlecker empire

From retail tycoon to bankruptcy: Anton Schlecker worked hard to build an international drugstore chain with more than 50,000 employees - who were all laid off when it went bust. How did that happen?

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Drugstore king faces trial

The higher the rise, the deeper the fall. Anton Schlecker, once one of Germany's most successful businessmen owning thousands of drugstores, now has to face trial. He is supposed to have steered more than 20 million euros ($21.25 million) away from creditors and into his family's pockets, before his retail chain went bust in 2012.

Should the judges at Stuttgart's district court find the 72-year-old guilty, he could go to prison for as many as ten years. His wife Christa and his two children Meike and Lars are also in the dock for allegedly assisting him. Is this the lackluster end of a German business saga?

It all started so well...

Schlecker opened his first drugstore in the southern German town of Kirchheim unter Teck, close to Stuttgart, in 1975. From this first venture, he went on to build an unparalleled retail empire. Two years later, he already owned 100 stores; by 1984 the number had grown to 1,000.

Anton Schlecker Prozess (picture-alliance/dap/M.Murat)

Anton Schlecker faces bankrupcty charges in Stuttgart's district court

Not much later, Schlecker sought to capture new markets and took his business abroad. By 2007, the company's store network stretched across 13 European countries, employed more than 52,000 employees and generated annual revenues of seven billion euros.

Scandal after scandal

Within a few decades, Schlecker went from a one-store venture to become Germany's market leader. But its rise was not a flawless one. Schlecker and his wife were put on a ten-month probation after they were found guilty of fraud in 1998. Stuttgart's district court ruled the couple had led their employees to believe they paid them in line with collective wage agreements - when in fact they paid them less.

Schlecker again made negative headlines in 2010, when it came to light that management had illegally installed cameras in stores to monitor employees. And around the same time it surfaced that the company was - again - paying employees less than it should under collective wage agreements.

Questionable savings

Schlecker used a loophole in a law, which was actually intended to protect temporary workers. They ended their employees' contracts to then re-hire them at a temporary employment agency they had founded themselves.

Proteste von Schlecker-Frauen (Picture-Alliance/dpa)

More than 25,000 Schlecker employees lost their jobs in Germany - and about the same number abroad

This allowed them to negotiate a new wage agreement, which effectively cut workers' wages in half - from 12 euros to 6.5 euros an hour. Even if the practice was legal and authorities had no power to intervene, Schlecker's image substantially suffered from the scandal.

The final act?

As customers more and more shunned the brand, management decided to overhaul stores and launched a big marketing campaign to repair its image. But these expenses eventually pushed the faltering company over the edge. Instead of the turnaround Schlecker hoped for, it went bust in January 2012.

As a result of the legal form under which it operated, Anton Schlecker and his whole family were liable for the company's bankruptcy. Back then they declared they had "no substantial private assets" left. The court in Stuttgart will now decide whether this was true - or whether they were just quick enough to channel their last savings out of creditors' reach.

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