On 14 May 1881, Rudolph Karstadt founded his first store Tuch-, Manufaktur- und Konfektionsgeschäft Karstadt (Cloth, Manufacture, and Mass Production Business Karstadt) in Wismar. In 1884, a second store was opened in Lübeck. Soon, 24 stores had been opened in all of Northern Germany. In 1920, the business was turned into a joint stock company. In 1984, Karstadt acquired the mail-order business Neckermann Versand. In 1994, it acquired the department store chain Hertie, to which KaDeWe belonged. In 1999 it finally merged with Quelle AG to become KarstadtQuelle AG, only to be renamed Arcandor AG on July 1, 2007. The current chief executive officer is Karl-Gerhard Eick (since 2009).
On June 5, 2009, investigations started into possible breach of trust offenses by Arcandor's former CEO Thomas Middelhoff.
In June 2009, Arcandor filed for bankruptcy protection after its request for loan guarantees of up to 650 million Euros had been rejected by the German government. The future of the employees is uncertain.
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