In March, retail and services company Otto Group announced a change of generation in control. Benjamin Otto (49) is to succeed his father Michael Otto as Chairman of the Foundation and Shareholders' Council in March 2026. Before that – at the end of the 2024/25 financial year, which concludes at the end of February – the 81-year-old intends to hand over the chairmanship of the Supervisory Board to Alexander Birken, who has been CEO of the Group since 2017. The corporate structure is also to be streamlined at this time.

„I would like to hand over control of the Group to my son Benjamin in 2026, and ensure that we have a manageable, simple corporate structure that is fit for the future by then,“ explained Michael Otto in an interview with Börsen-Zeitung. In 2015, the majority shareholder transferred his shares in Otto GmbH & Co KG (Otto Group) to a foundation – the non-profit Michael Otto Foundation – in order to preserve the group as a family business.

In recent years, Otto reports, various intermediate companies have already been abolished, due to the complex shareholding structure with the individual shareholders and the foundation. With the reorganisation, all shareholders are now directly involved in Otto Holding AG. Following the conversion of the Otto AG für Beteiligungen into a GmbH & Co KGaA, the final step in simplifying the corporate structure is now to „grow“ the Otto GmbH & Co KG into a partnership limited by shares (KGaA).

„In future, the group of companies will operate as Otto GmbH & Co KGaA, in which the shareholders have a direct stake,“ explains the billionaire entrepreneur and founder. There will no longer be any intermediate companies. „The majority stake in the KGaA will be held by the Michael Otto Foundation", he says. In addition to the foundation, other limited shareholders in the operating company are members of the Otto family.

Why this legal form? The KGaA is a form of company law that is particularly favourable to family companies, says Otto. On the one hand, the family shareholders can exert significant influence via a shareholder council, which is not the case with an AG. „On the other hand, we can also utilise the capital market with this legal form.“

There are no plans „at the moment or in the foreseeable future“ to strengthen equity on the capital market. However, the son from the first marriage of mail order company founder Werner Otto, who died in 2011, emphasises that it is also important to think about possible developments in ten or 20 years time, or about the next generation. „We should therefore have a company form that is fit for the future, that gives us flexibility and all options for financing.“

The Otto Group goes back to a partnership founded in 1949 (Otto Versand). In 1960, it became Otto Versand GmbH & Co KG, which was renamed Otto GmbH & Co KG in 2002. To expand the business, Werner Otto gradually sold shares in the former Otto Versand to three different shareholder groups and reduced his stake to 50%. In later years, Michael Otto gradually reacquired the shares. Since the end of 2007, the Otto Group has once again belonged entirely to the founding family.

After simplification of the complex corporate structure with various intermediate companies, the upcoming change of legal form will take the form of a universal succession, Otto further announces. Nothing will change for business partners, customers or employees. Committees such as the works council will continue to exist, as will all works agreements and employment contracts. „With the new partnership limited by shares, we will also join the HDE (German Retail Federation) employers' association, so that we will continue to be bound by collective agreements.

Michael Otto points to Bertelsmann, Henkel and Merck as examples of family businesses with the legal form of a partnership limited by shares. „This shows that this is a very good legal form for family companies", he says. Like Henkel and Merck, being listed on the stock exchange is not on the cards for the Otto Group in the foreseeable future. There are no considerations in this direction. „But I don't want to rule out an IPO in the long term either,“ Otto adds. „I don't want to be accused later of not having made this option possible.“

Otto emphasises that a sale of the group is out of the question. The Michael Otto Foundation will always remain the majority shareholder. At the same time, however, the legal form should keep all financing options open. „As an entrepreneur, you also think about this: a family business should be able to last for generations,“ he says.

To date, the Otto Group has utilised the capital market by issuing bonds. In June 2021, the online fashion platform subsidiary About You also went public. According to Otto, an IPO is also possible for other subsidiaries. The Otto Group and family shareholders currently hold a total stake of 44.65% in About You.

Like other e-commerce fashion providers, Michael Otto believes that the Otto Group's only listed company is currently undervalued. After the slump in business following the pandemic-related boom in the industry, things are going better again this year for online fashion retail. „I am convinced that better times will come again for fashion e-commerce companies – also in terms of their valuation on the stock market.," he says. He believes that About You, whose share price is currently more than 85% below the issue price, will be successful in the long term as it is a creative company.

As in the previous financial year, the Otto Group posted a loss in the 2023/24 financial year, to which an impairment loss of 175 million euros on the About You goodwill also contributed. According to Michael Otto, things are „looking much better“ in the current financial year, and the group will show good profits, not only operationally, but also before tax.

The company will also make „good progress in terms of liquidity, so that we have a very solid foundation this year“. Otto adds that this is also important to him personally, as he would like to hand over the chairmanship of the Supervisory Board to his successor after a good financial year.

With regard to strategic investments in the Group, Otto refers to the logistics and IT areas. In October, a new logistics centre was opened in Ilowa in western Poland, for which a mid three-digit million euro sum was invested. In the summer, the Otto Group also opened a shuttle warehouse for About You in Altenkunstadt in Upper Franconia. Thanks to the technological modernisation of the site, in which around 150 million euros were invested, Altenkunstadt is one of the most modern and largest logistics locations in Europe, according to Otto. „This underlines our ambitions in online retail, we want to ensure fast and good delivery.“ The company is also currently investing hundreds of millions of euros in IT, particularly in the field of artificial intelligence. „We have to invest in order to stay up to date," he says.

The Otto Group's financial position will be very good at the end of the current financial year. The equity ratio was also well above the target level of at least 25% last year. „Cash generation is also looking good, which is important for investments," says Otto. A good result will be achieved in 2024/25. „At the moment, we are not focussing on growth and turnover, but on profitability and liquidity.“

Otto is concerned about the uncertainty caused by current political developments. „This affects us in Germany in particular following the break-up of the coalition government.," he says. If the formation of a new government were to drag on for several months until well into next year, this would result in a longer phase of uncertainty. „This would have a negative impact on consumer sentiment, especially in Germany.“

Business in Germany accounted for around 56% of Group sales in the 2023/24 financial year, while Europe, including Germany, accounted for almost 81%. „So far, we are confident about the development of consumer sentiment in Germany and our company's performance in 2025,“ says Otto.

However, the political framework conditions play a major role for consumption. „It is urgently necessary for the Federal Chancellor to proceed with the vote of confidence very quickly,“ Otto says, with a view to the upcoming elections. Germany needs a stable government again as soon as possible. „That would be important in view of the challenges we are facing in Germany and Europe.“