Edcon is shutting down more brands including Red Square
DURBAN - Edcon Holdings said on Thursday that it will be closing three of their chains, including 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 1300 store footprint 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, however, Boardmans will also be shutting down too.
Pattison said that he thinks that the company can turn. He said, "The quicker we can do this, the better".
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.
- BUSINESS REPORT ONLINE