Against all odds, Edcon looks set to mark its 90th anniversary in September, brought back from the brink by last-minute financial life support from banks, landlords and the Public Investment Corporation (PIC).
The group was set to run out of cash at the end of February, but the latest recapitalisation injects R2.7bn into the country’s largest nonfood retailer, its second in two years and third in total.
In the latest rescue plan, investors wanted certainty the group was well on its way to recovery before they would inject money.
The group has a five-year plan covering property, costs and contracts and there is early evidence it’s paying off.
CNA’s sales, with 18% less space, are up 10%-15% on last year, and so far Edcon has made more of a profit in the past four months than in the same period in the year before.
Stock, staff, fixtures and fittings will be moved from downsized and closed stores to others outlets, but the staff complement will be retained at current levels.
Landlords had four options: close stores, retain them, relocate or shrink. Melrose Arch was the largest loss-making store from day one, and it’s now closed. The Mall of Africa store has been reduced from two floors to one.
What can consumers expect?
Shoppers can expect refreshed stores, “but there’s no big bang coming”, said Pattison. The group’s private-label offering accounts for 55% of sales, and they’re looking to grow this to 60% over three years.
“It’s about needing to fix the fashion product and get service right. We’ve forgotten some of the retail disciplines,” said Pattison.