Edcon sees improved trading

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Edcon Independent Newspapers Photo: Leon Nicholas.

Johannesburg - Edcon Holdings said trading at its lower-price units has improved in the past two months after a weak third quarter.

“Clearly there is a tightening in the market,” Edcon chief executive Officer Jurgen Schreiber said on a conference call from Johannesburg today.

“We’ve seen positive momentum in the discount division in January and February,” while “benefits from our refurbishments are coming through.”

South African retailers have been reporting weaker sales growth for the final quarter of 2012 after rising unemployment and inflation put the brakes on consumer spending.

Edcon posted a net loss of 836 million rand ($93.5 million) for the third quarter to December 29, compared with a 235 million-rand profit a year earlier, it said in a statement today.

Sales rose 0.8 percent to 8.8 billion rand.

Bain Capital, based in Boston, bought Edcon for 25 billion rand in May 2007 to tap into rising consumer spending in Africa’s largest economy.

Edcon, which owns chains including Edgars, Jet, CNA, Boardmans and Red Square, had 1,220 outlets at the end of the reporting period, with the average retail space rising 3.7 percent.

Truworths International, South Africa’s biggest clothing retailer by market value, said yesterday a weakening consumer credit environment would weigh on its performance in the first part of 2013.

African Operations

Edcon, which also has stores in Botswana, Namibia, Swaziland, Lesotho, Mozambique and Zambia, said revenue generated in Africa outside of its domestic market contributed 6.5 percent of retail sales in the quarter.

“We are seeing very strong growth in our African operations,” Schreiber said. “Our businesses outside of South Africa are giving better returns than our home market.”

Four stores were opened in Mozambique in December and Edcon plans to open outlets in two more countries by the end of the year, Schreiber said, without specifying which countries.

The yield on Edcon’s euro-denominated bond due March 2018 fell for a third day, sliding 3 basis points, or 0.03 percentage point, to 10.18 percent by 2 p.m. in Johannesburg. - Bloomberg News

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