A loss of R636m on both foreign exchange movements and failed hedging strategy worsened Edcon Holdings’ loss in the quarter ended June.
The total loss for the period jumped 66% to R828-million compared with the June quarter last year, Edcon said on Thursday.
Of the foreign exchange loss, R583-million was on currency movements, while the balance was on failed hedging. Edcon has to take currency movements into account as 90% of its debt is denominated in currencies other than the rand.
The local has declined about 20% against the dollar since last June.
A hedging strategy also failed to protect the retailer, resulting in a derivative loss of a further R53-million. Edcon has more than R20-billion in debt, which private equity used to buy and delist the company from the JSE in 2007.
Revenue fell 0,5% to below R7-billion as a domestic economic slowdown negatively affected store sales. Same store sales decreased 3,6%, says Edcon.
In July Edcon exchanged its most expensive debt that was due to be repaid in 2019, resulting in a R1-billion saving in interest payments this year, says CE Jürgen Schreiber. The company would now focus on operations to improve efficiencies, he says.
By Sikonathi Mantshantsha, BDLive