The Foschini Group to skip rental payments amid SA lockdown

Source: SA Commercial Prop News

As South Africa goes into a 21-day nation-wide lockdown, The Foschini Group – whose brands include Foschini Stores, @home, Markham, Totalsports and Sterns – has said it will stop rental payments because of the impact of the coronavirus outbreak.

This comes days after Edcon, SA’s second-biggest clothing retailer, said it may not be able to re-open after the 21-day lockdown.

The Foschini Group has 2 582 outlets across Africa which are now closed after President Cyril Ramaphosa ordered a three-week national shutdown from 27 March to combat the pandemic.

While essential services such as grocers, pharmacies, banks and gas stations are allowed to remain open, clothing retailers are not.

The Cape Town-based owner of Totalsports and American Swiss jewellery chains is also halting any planned expansion projects and will delay store refurbishments, TFG said in a letter to its landlords seen by Bloomberg and verified by the company.

“Once the situation normalises we will then be able to assess the full financial impact on the business and will engage with you further,” it said.

It is believer other retailers, big and small, are contemplating putting a stop to rental payments as business grinds to a halt.

Edcon, which had already been under financial strain, said what it’s experiencing is an indication of the challenge that many other businesses and the government will have to face after the shut down.

Although yet to recover from Edcon’s woes, retail landlords are set to face even more intense pressure as Walmart-owned Massmart announced recently the closure of 23 DionWired stores across the country.

TFG, which operates in South Africa, Australia and the UK, occupying space in major centres, went against the prevailing retail trend by producing positive trading updates in a difficult economy. The group pushed up turnover 5.9% for the nine months to 28 December 2019, compared to the corresponding period in 2018.

Coronavirus crisis in South Africa

As of Wednesday, South Africa has 1 353 cases with 5 fatalities.

Globally, coronavirus cases have reached 859 032 cases, with 42 322 deaths recorded.

South Africa is also facing additional headwinds after ratings firm Moody’s downgraded the country’s credit rating to below investment grade.

Moody’s downgraded South Africa’s long term foreign and local currency debt ratings from Baa3 to Ba1 with a negative outlook.

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