Tag: Edgars

By Promit Mukherjee for Reuters

Parts of South African retail chain Edcon are likely to be sold to private equity-backed Retailability, administrators in charge of its restructuring said.

Best known as owner of the 91-year-old department store chain Edgars and budget clothing retailer Jet, Edcon is one of South Africa’s oldest retail groups but applied for a form of bankruptcy protection in April.

“Retailability plans to utilise Edgars’ unique value proposition, and large attractive target market, to ensure the growth and continuity,” Edcon’s administrators said in the statement, which was issued on Monday.

Edcon entered a process called business rescue in South Africa after it failed to generate enough revenues as a coronavirus lockdown shut its stores across the country. Less than half the 199 stores that fall under the Edgars stable are deemed viable, say business rescue practitioners.

Its administrators said a transaction with Retailability would save a “significant” number of jobs.

Piers Marsden and Lance Schapiro of Matuson Associates, administrators of the process, said last month that they had identified 15 parties interested in picking up all or parts of debt-laden Edcon.

The statement did not say what Retailability would pay and which parts of Edcon the Durban-based retail chain, which bought Edcon’s young women’s fashion division, Legit, in 2016 for 637 million rand ($37.29 million), would buy.

Matuson Associates and Retailability did not immediately respond to an email seeking comment.

Retailability, which runs two other clothing outlets, Beaver Canoe for men’s fashion and Style for families, has 440 stores and some 2,000 employees in South Africa and neighbouring countries.

These are mainly located outside of big cities where the core if its low to middle income target market exists.

By Londiwe Buthelezi for Fin24

The business rescue practitioners for Edcon say the only way to save the company and the livelihoods of its thousands of employees is through “accelerated sales” of the clothing retailer’s divisions to interested parties.

Edcon, which owns Edgars and Jet Stores, announced on April 29 that it would file for voluntary business rescue after the nationwide lockdown exacerbated its already dire financial position, causing the group to lose about R2 billion in sales when it was not allowed to trade.

Now the BPRs have delivered a rescue plan for the retailer, published on Edcon’s website on Tuesday morning. According to the plan – an “accelerated sales process” of divisions that can be sold and a winding down of those they may fail to sell would be in the best interests of all stakeholders. The BRPs said this proposal was a product of consultations with Edcon’s creditors, landlords, employees representatives and trade union, Saccawu.

No parties have shown interest in investing in or providing funding to Edcon, said the company.

Mr Price has rejected speculation that it has been looking to acquire retail chain Jet, a unit of struggling fashion giant, Edcon, which recently went into business rescue.

“The Group has no intention to acquire Edcon, in part or in whole,” the Durban-based retailer said in a statement on SENS last week.

However, a recent Business Day article stated that Edcon has attracted 15 entities interested in buying one or both of its two divisions.

The sale of Edcon’s businesses as a going concern would allow the company to transfer some of the employees to new owners, resulting in a significant number of jobs being saved.

“If the sale is implemented, the BPRs will seek to obtain the sale of the business or its divisions as going concerns, thereby resulting in the transfer of the relevant employees and many jobs being preserved. Employees who are retrenched, if any would be in a better position than in a liquidation,” wrote the BRPs in the business plan.

They added in a statement published by Edcon on Tuesday that creditors and landlords would also be in a better position if Edcon entities continued trading.

According to the BRPs, a significant number of parties have already expressed interest in the sales process. Initially, the BRPs received interest from 19 parties who were keen to participate in the accelerated sale process, they said. Fifteen of these complied with the requirements to proceed as preferred bidders. They are required to submit their final offers to by the end of June 2020 and finalising of successful bids will happen by early July 2020.

Divisions that aren’t sold in that process could be auctioned or sold in private treaty sales, among other means. The BRPs said Edcon employees continued to receive their salaries in April and May and they expected to make such payments again at the end of June.

Edgars launches new concept store

On 22 August, Edgars opened a brand new store in Fourways Mall, displaying the brand’s new positioning and business direction into a physical open-floor space.

Ever since Edgars re-launched the brand last year, the retail giant has used inspiration from South African culture, to cater to South Africans who want to express themselves through fashion, no matter how conservative or edgy they choose to be.

Internationally, retailers are purposefully rewiring themselves in the ever evolving retail landscape to enable the ‘experience economy’. Retail isn’t dead; boring retail is dead. In order to thrive in a time where customers can do anything anywhere and get personalised real-time experiences both online and in-store, big retailers need to make the shift.

And Edgars is no exception. Working closely with design-and-build focused agency Design Partnership, Edgars has created an environment that goes beyond the transaction, setting an enticing stage for meaningful and memorable experiences.

The Edgars Fourways Mall shop front opens up completely, providing an 8 000 sqm space for fashion, beauty, and homeware.

Edgars Fourways Mall is a subtle nod to the heritage of retail stores as the heart of the high street. Just like a town square, a multi-sensory, tree-lined central social space anchors all Edgars’ in-store departments on both floors, activating the in-between-space with key services and exclusive food partnerships.

The bespoke Mugg & Bean coffee shop in the central square heightens the concept of creating entertainment through shopping and socialising. This beautifully designed space invites customers to take a little time out without having to leave the store.

For those customers pressed for time to browse in store, Edgars has just launched a new click and collect service. Shoppers can now shop online (or on their mobile devices), choose a store for delivery, and collect their order at no additional cost. This online service is now available at the new Edgars in Fourways Mall.

Other special in-store features and services that customers can look forward to interacting with include the denim bar, home zone, footwear world, custom zone, personal shoppers, and beauty rooms.

An elevation of the beauty counters that Edgars has always been known for, the beauty rooms’ house beauty experts trained to give customers head-to-toe makeovers and to share their knowledge on the brand’s latest exclusive beauty products.

Activation spaces for cosmetic events, home demonstrations, and new launches bring in an experiential element to the store. There are play areas for kids and digital multi zone screens with in-store music.

All this without any traditional clutter or stuffy aisles. Capitalising on the iconic Edgars ‘Red Square’, the floor is a liberated space. A focal bulkhead and feature overhead lighting naturally lead the customer throughout the store towards the central square and other key customer services.

Adding another unique finish to the total shop experience, non-transactional spaces that focus on customer service have been designed with a hospitality-led approach. For example, instead of a typical counter service, the customer/financial service zones are far more welcoming and friendly with their service booths, soft seating, and informal pause areas.

“Ultimately it’s a social retail space designed for pure experience,” says Edgars chief executive Mike Elliott.

“That was the starting point for the design that is the new Edgars Fourways Mall. In line with future retail trends, we’re prioritising interaction over transaction, and we’re doing it all especially for the South African consumer. As a brand we are unapologetically South African about our love for everything local, and this store is our latest expression of that culture.”

The design language and iconography for the entire store not only makes navigation simpler for the customer, but also embraces an authentic local tone in a way that represents all South African walks of life. Every element in Edgars Fourways Mall is designed to create a contemporary yet warm and friendly South African environment.

Because retail is always adapting to market and customer needs, Edgars Fourways Mall is designed exactly for that: for change. This enables the brand to advocate South African culture of its time through product and to continually embrace in-store experimentation newness, building an ever-growing Edgars experience.

The entire store environment is agile enough to allow departments to shift and adapt. Each department is set up with tracks that not only house the technical display lighting but also allows for feature lighting and other power requirements to be plugged in and suspended wherever needed as the departments move.

The brand is currently working on a further evolution of the new Edgars store design for Edgars V&A in Cape Town, which is anticipated to open in 2020.

Edcon group gets R2.7-billion lifeline

By Lynley Donnelly for Mail & Guardian

The Unemployment Insurance Fund (UIF), debt holders and landlords have all come to the rescue of the troubled Edcon group — which owns Edgars, Jet and CNA — in a deal that proponents say will avert a “jobs massacre” and swathes of mall space being shuttered.

The recapitalization programme will inject R2.7-billion into the company through new cash commitments from the parties and rent reductions by participating landlords, the company said in a statement late on Friday afternoon.

The Southern African Clothing and Textile Workers’ Union (SACTWU), as well as trade federation Cosatu, have hailed the deal.

It will avert a “job’s massacre,” not just at Edcon but in the wider clothing and textile manufacturing industry, said Sactwu’s national industrial policy officer, Etienne Vlok.

The sentiment was echoed by Edcon chief executive Grant Pattison who said the deal was not just about saving Edcon jobs.

According to Sactwu’s research Edcon procures around 45% of its clothing products locall — the most of all the country’s major retailers. The local manufacturing businesses that Edcon supports are also concentrated in geographic areas in rural and peri-urban areas, particularly in KwaZulu-Natal, Vlok said.

Edcon – one of the country’s largest non-food retailers, which occupies around 10% of mall space – has battled to cope with an increasingly tough retail landscape, crowded with both international competitors and increasingly popular online offerings. It has also been labouring under a legacy of debt since it was delisted in a private equity deal by Bain Capital in 2007.

Critics have however argued that public funds should not be used to rescue a poorly performing private company, whose demise began with a highly leveraged private equity deal.

The UIF – whose assets are managed by the Public Investment Corporation – has R156-billion in surpluses. The fund pays out workers in the event of retrenchment or job losses.

But according to Vlok rather than a bad investment, the UIF’s participation was potentially a cost saving for the fund. This was based on the union’s belief that as many as 140 000 jobs could be lost – both directly at Edcon, which employs about 30 000 people, as well as in the wider clothing and textiles manufacturing sector.

In a presentation given to the UIF in January, arguing that it should help fund Edcon, the union calculated that the fund would have paid between R2.95-billion and R3.9-billion to support workers who would have potentially lost their jobs.

The UIF did not immediately respond to questions for comment but according to Edcon’s Pattison, the participating parties all contributed a roughly equal amount in cash, leaving the UIF’s contribution in the order of around R1-billion.

“Edcon is a very large employer of people and we also buy an enormous amount of goods, manufactured here in South Africa,” he said.

“Edcon’s problem is not just one of our staff, its multiplied by a factor of three or four.”

The fund’s mandate does allow it to invest in transactions that have social returns.

In response to questions early last month spokesperson for the fund Makhosonke Buthelezi, told the Mail & Guardian that the fund’s “mandate makes provision for a social responsible investment asset class of 20% of the total portfolio”.

“The intention of this asset class is to sacrifice some financial return for a higher social return,” he said.

“Should the Fund consider [investing] in Edcon in an effort to retain jobs and [prevent] the negative effects it will have on the economy, the decision will be based on a thorough due diligence process and risk impact assessment.”

The potential impact of an Edcon collapse would also have been felt by the property sector – as it occupies around 10% of some of the country’s prime mall space.

As with the UIF, there was commercial sense behind landlords participating in the deal, said Pattison.

“They looked at the potential benefit of helping us survive, albeit in a smaller shape and size,” he said.

In the run up to the deal’s announcement, Edcon was reported to have asked its landlords to reduce its rents by as much as 40%.

Pattison stressed that while most of Edcon’s major landlords had participated in the deal, not all did. There were also a number of landlords who had negotiated different arrangements with the retailer.

“The participating landlords have committed to giving us some cash and for that they get an equity stake,” he said. While some have opted to give Edcon cash upfront, others are providing cash over time – in what could be viewed as a reduced rental. Still other landlords are opting for measures such as releasing Edcon from lease agreements, to enable it to close down poorly performing stores, said Pattison, or helping Edcon renovate stores.

He could not disclose the size of the equity stake different landlords, or that the UIF, would take up. But he stressed that it was “not a particularly large share” and would not entitle them to “some special relationship with the company”.

Edcon Holdings is making progress toward securing R3-billion in funding need to keep the South African clothing retailer afloat for another three years, according to Business Day.

The Public Investment Corporation (PIC), Africa’s biggest money manager, may provide R1.8-billion to assist the company. In addition,  landlords may contribute another R700-million in reduced rent, and Edcon’s banks about R500m, they said.

Meanwhile, according to an article by MoneyWeb, Edcon aims to take the following steps in a bid to downsize:

  • Reduce the size of its Edgars store in the Johannesburg CBD by a third
  • Close down its big Melrose Arch store
  • Reduce its footprint at shopping centres across the country
  • Reduce regional footprints in centres such as Mall of Africa, Eastgate and Gateway
  • Continue with closing smaller stores across the country (115 have been closed to date)
  • Downsizing several stores
  • Continue to reduce retail space – in 18 months, Edcon has already downsized by 7%
  • Reduce space nationally by 5% – 7% per year over the next few years

Edcon is one of the country’s biggest employers. It has 1 200 stores which employ approximately 30 000 permanent and casual workers.
Over 100 000 jobs are supported by the company when clothing suppliers and other service providers are included.

 

Edcon may run out of money in 2019

According to a report by the Financial Mail, Edgars may “effectively run out capital towards the end of 2019”.

After Bain Capital paid R25-billion for the company, the retailer’s balance sheet saw debt of R17.3-billion – an amount that nearly sank the company as the 2008 financial crisis hit.

Since 2012, Edcon has lost an estimated 22% of its clothing and footwear market share where it once held more than 50% of the sector, according to Financial Mail.

Edcon still owes an estimated R7-billion to its lenders.

On a positive note, Stats SA reported that retail sales grew 2.5% for the year to August — almost twice the 1.4% annualised growth reported in July.

The problem is, says the Financial Mail, that Edcon is making a loss, and “someone has to fund the loss”. This falls to the shareholders and the problem under discussion is “how long will they fund these losses”?

Edcon’s most recent set of accounts, for the year to March 2018, saw sales down 4.8% to R24.1-billion. Trading losses ballooned to R1.36-billion from R373-million in 2017. Even though R20-billion in debt was written off in 2016, Edcon incurred R1.53-billion in “financing costs” to repay remaining debt. The three months to June were no better: sales were down 8.8%, and the quarter saw trading losses of R225-million.

The lack of customers are evident at even flagship Edgars stores. “At Melrose Arch, most of the initial space Edgars occupied is boarded up, reinforcing the impression of a gradually disintegrating department store,” reports Financial Mail.

As many as one in five South Africans used to shop at one of the 1 350 stores owned by Edcon. Despite the downward trend, Edgars has remained SA’s largest nonfood retailer, accounting for nearly a third of the clothing and footwear market.

The company employs more than 27 000 staff members, with an indirect effect on a further 100 000 people.

Source: IOL 

Edcon Holdings said on Thursday that it will be closing three of their chains: Boardmans, Red Square and La Senza lingerie.

This is the latest strategy to save the company after dwindling sales and profits.

By shutting down the other chains they hope to attract more customers to their flagship Edgars stores.

The decision to shut down certain chains comes from the newly appointed CEO Grant Pattison who took over the position fro Bernie Brookes. Edcon is South Africa’s largest non-food retailer.

The Johannesburg company has had a hard time staying afloat amid weak consumer spending and economic growth and in 2016, the company had to be taken over by banks and bank holders to stop it from collapsing.

Under Pattison’s plan, Edgars will cut down on more than 1 300 stores’ footprints as well as reduce floor space by 17% over the next five years to increase profitability.

They will also be focusing on Edgars mainly, which sells most of the of the items that are available in the stores that are being shut down.

Other stores that have made the cut include CNA and Jet.

Pattison said that he thinks that the company can turn. He said, “The quicker we can do this, the better”.

Debt

The urgency to make changes comes after Edcon retail sales dropped by 9,4% in three months through December 23 while adjusted earnings before tax, taxes depreciation and amortisation declining by 25%.

The owners of Edcon Holdings are Frank Templeton Sanford C. Bernstein & Co. LLC and Harvard University Pension Fund. They took over when Edcon was struggling under foreign-currency debt that was used to finance the takeover by Bain Capital Private Equity LP in 2007.

The 89-year-old company also employs 14 000 permanent a significant number in a country where more than 1 in 4 people are unemployed.

At the of last year, the company’s net debt was R4,2 billion. Some of the other attempts to revive the company include increasing the workforce, decreasing prices and bringing in international brands.

Edcon said earlier this year that they were in talks with creditors about refinancing debt to strengthen the balance sheet. Edcon also has liquidity facilities and credit facilities that will be maturing towards the end of 2018.

CNA and Edgars stores to sport new look

By Lauren Hartzenberg for BizCommunity 

A rebrand is on the cards for CNA and Edgars stores as part of Edcon’s turnaround strategy to win back shoppers, reported Business Day on Friday.

CNA and Edgars stores to sport new lookFormer Massmart CEO Grant Pattison replaced Bernie Brookes as Edcon chief executive at the start of this year, and has since been focusing on reconfiguring the retail group’s offerings.

While Edgars and Jet had continued to trade positively in ladieswear and footwear according to its latest quarterly performance report, overall Edcon reported a 9.4% drop in retail sales for the third quarter while total group revenues decreased 8% to R8.2bn owing to a decrease in retail sales of R795m compared with the prior period.

The departmental store retailer has been battling to maintain market share in South Africa’s increasingly competitive retail environment, with European retailers like H&M entering the local market and expanding its footprint at a rapid rate.

Despite challenges, Pattinson has stated that the company is recommitting to the departmental store model, explaining that the model “offers convenience”.

Edgars is in the process of a logo facelift, which would complement the new store layouts and the roll-out of its next-generation stores, CEO Mike Elliott told Business Day.

CNA will also be undergoing a rebrand and would be consolidating its focus on stationery, educational materials and arts and craft. “A new store layout would ensure customers could do self-service,” said CNA’s general manager, Julie Day.

Edcon may close flagship Edgars store

According to a recent article by Business Day, Edcon is considering closing its flagship Edgars store in the Johannesburg CBD.

This will form part of the ailing retailer’s turnaround strategy, as the company determines whether the Edgars brand is still a viable one to CBD commuters.

Edcon CEO Grant Pattison told Business Day that part of the idea was to have Edgars located in regional malls where it could take advantage of the traffic density.

“We are probably going to end up with one store in the CBD and it’s likely to be Jet.”

The Johannesburg CBD is home to three Edcon stores: an Edgars department store, a Jet store and a Jet Mart.

The 89-year-old retailer opened its first Edgars store in Joubert Street, Johannesburg, and has grown to have more than 1 300 shops across Southern Africa with nearly 12-million customers.

Edcon first alluded to the downsizing of space in a recent quarterly statement and has already closed more than 200 stores.

“I am a cynic about whether retail is changing, but what is fundamentally changing is the retail customer,” Pattison said.

Edcon reported a 9.4% decline in group retail sales to R7.6-billion for the third quarter of 2018, which ended on December 23. Total group revenue declined 8% to R8.187-billion.

Edcon’s flagship store, Edgars, has been struggling to find its place among modern South African consumers, who are enjoying shopping at international stores like H&M and Zara.

Earlier this month the company reported a quarterly sales decline. According to an article published by the Sunday Times, Edcon decided a few years ago to go with more fashionable expensive assortments and they forgot about their heartland customer, which is at the very centre of the business.

“If they are not selling the merchandise they have in their stores then they have to change their strategy, and Edcon appears to have been through some major changes,” Andrew Jennings, former president of Saks Fifth Avenue, GM of Harrods and MD of Woolworths, and author of Almost is Not Good Enough – How to Win or Lose in Retail, is quoted as saying.

Over the past decade, Edcon has struggled with leadership as its three CEOs have made some notable strategic blunders. The company has been in operation for 89 years. As of March 2017, Edgars had 1 343 stores including 187 stores in eight countries outside of South Africa.
Edcon has been selling off stores – the Legit store chains, with the exception of those operating in Botswana, were sold effective 29 January 2017 and the Edgars Shoe Gallery store chains closed during the 2017 financial year.

In addition, Edcon has closed 253 stores – but this has left the retailer with too many leases in malls and no brands to fill the empty space

According to The Sunday Times, the store has been trying to find a solution to this empty floor space and as such has introduced a coffee shop into its Eastgate Mall store called Made Café . This serves both to use up empty space and to act as a drawcard to the store, following the modern consumer trends.

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