The Jelmoli department store in Zurich is being remodeled and realigned

Here and there, the terrible news was circulating through the media that the Zurich department store Jelmoli in the city center of Zurich would have to close. Immediately, people thought of greedy speculators who could never get their hands full enough and would be responsible for the closure. But the decision was not made by some wild-eyed speculators, but by the owner itself, the Zug-based company Swiss Prime Site AG. It sees the current situation of the Jelmoli department store as no longer sustainable in view of changing consumer behavior and the ever-growing online trade. As of today, the company is communicating almost two years in advance the closure of the department store, which will affect 550 internal jobs and 300 partner employees. For the owners, the focus is not on the closure, but on the conversion and the new alignment to current market needs.

In its media release concerning the Jelmoli department store, Swiss Prime Site AG writes the following:

MEDIA RELEASE Ad hoc announcement pursuant to Art. 53 KR

Zug, February 6, 2023

1. Modernization and repositioning of the Jelmoli building
2. Property is being further developed and realigned
3. Department store is adapted to market needs and operated in a new form
4. Transformation process takes place under new Jelmoli management
5. One-time special charges of CHF 34 million in an otherwise successful financial year for SPS

The Board of Directors and the Group Management of Swiss Prime Site have decided to convert the Jelmoli building on Zurich's Bahnhofstrasse and to further develop it in a sustainable manner. In this context, it is planned to adapt the retail areas to current market requirements and to add new types of use to the building.

Property is being further developed and realigned

The tradition-steeped building in Zurich's city center is expected to be converted over a period of two years from the beginning of 2025. After that, newly designed, high-quality retail space with around 10,000 m2 will be available on the lower floors. Both existing tenants and new brands and formats will be considered for this. The conversion will ensure that the Jelmoli building remains one of the largest and most attractive shopping destinations on Zurich's Bahnhofstrasse. Part of the upper floors will be transformed into first-class office space and supplemented by public uses such as fitness or gastronomy. René Zahnd, CEO of Swiss Prime Site, comments: "With the conversion of the building, we are adapting it to today's market requirements. In addition to an attractive mix of uses and spaces, this also includes flexibility and multi-party capability. Our goal is to further develop the Jelmoli building into a unique destination and an open urban meeting place." Swiss Prime Site intends to invest over CHF 100 million in the development project. The reopening of the completely renovated property is planned for early 2027.

Department store is adapted to market needs and operated in a new form

The decision to convert the building and make it fit for the future was taken after a profound and comprehensive analysis. With the extraordinary dynamics of online retailing and changing consumer behavior, stationary retailing came under increasing pressure. Despite high investments by the owner Swiss Prime Site and the great commitment of all employees, this structural change was clearly reflected in the profitability of the Jelmoli department store. Against this background, Swiss Prime Site conducted a thorough market sounding in recent months with the aim of placing the operational management of the department store in new hands. The intensive discussions with numerous potential partners have not yet led to the desired success. Accordingly, Swiss Prime Site has now decided to adapt the Jelmoli department store to the new market conditions as of the end of 2024 and to position it on the market in a new form as of 2027, and to no longer operate it itself. René Zahnd, CEO of Swiss Prime Site, comments: "We are aware of the implications of our decision, have taken it after careful consideration and are communicating it at an early stage. This will give the employees time for a possible professional reorientation. In the meantime, we will provide them with professional guidance and the best possible support. Customers can continue to buy with the usual high level of service and we will enter into an intensive exchange with our business partners about future cooperation.

Transformation process takes place under new Jelmoli management

Nina Müller, CEO of Jelmoli, will hand over the management of the department store to new hands at her own request in spring or by the end of June 2023 at the latest. As a result, Jelmoli will also no longer be represented on the Group Management of Swiss Prime Site. Reto Braegger, currently Chief Merchandise Officer, will seamlessly take over the management of Jelmoli. As a long-standing manager in the retail industry, he has extensive experience with transformation processes. The Board of Directors and Group Management of Swiss Prime Site would like to thank Nina Müller for her dedicated service over the past three years, especially in the difficult environment of the pandemic.
One-time special charges of CHF 34 million in an otherwise successful financial year for SPS
The "Jelmoli-Haus" transformation project will have a one-off impact of around CHF 34 million on Swiss Prime Site's income statement in the 2022 financial year. This amount includes exclusively non-cash value adjustments and special write-downs (for equipment, furniture, IT, inventory, etc.). Despite the extraordinary expenses, Swiss Prime Site was able to achieve the set targets in the 2022 financial year, mainly due to positive letting results and growth in the Real Estate Asset Management segment.