Insolvent German retail group Arcandor has abandoned its search for a buyer for the whole business, and is now planning to break up its Karstadt department store and Primondo mail-order units with the loss of around 3,700 jobs.

"The likelihood of finding an anchor investor for the corporation as a whole has 'decreased sharply'," the company's administrator said in a statement yesterday (13 August).

Arcandor, which filed for insolvency in June after the German government rejected pleas for state aid to help repay loans of EUR710m (US$1bn), is now focusing on finding investors for Karstadt and Primondo.

Immediate plans to restructure the Karstadt business focus on the closure of 19 of the group's 126 department and sporting goods stores.

Talks are also underway with service providers and suppliers about revising existing contracts.

At Primondo, all of the 109 loss-making Quelle Technology Centres are to be closed, and around 450 Quelle shops are being shut to leave a smaller unit of around 1,000 stores.

The 3,700 job cuts will be implemented by January 2010, and account for about a third of Quelle's 10,000 workers.

Nevertheless, the administrator says around 7.5m copies of the main Quelle catalogue have been sent out and that business has stabilised, with e-commerce sales up 10% on last year.

"Through restructuring, Quelle has a realistic chance of emerging from insolvency as the European leader in integrated home shopping with its current base of well over 6m active customers," said administrator Dr Klaus Hubert Görg.

He envisages a "new" Quelle, which retains its store presence and keeps its printed catalogue business while moving towards e-commerce and home shopping.

"We will be relying on the instruments provided for under insolvency laws to reconfigure the core elements of Arcandor's business in such manner as to ensure a viable concern," he said.

Restructuring ideas are due to be presented to creditors in the first half of November.

Earlier this year German retailer Metro Group said it was "open" to talks to merge Karstadt with its Kaufhof department stores.