Edcon to file for business rescue after losing R2bn due to virus
JOHANNESBURG - The Edcon board has passed a resolution authorising the company to file for business rescue in the course of the next few days after losing R2 billion due to the Covid-19 pandemic, the company said in a statement today.
Edcon, South Africa’s biggest clothing retailer said that following the coronavirus outbreak in South Africa, and President Cyril Ramaphos’s first announcement on March 15, Edcon has lost R2bn in sales.
“The sales miss and the decline in collections of the debtor’s book has meant that Edcon is unable to pay its suppliers for both the March and April month-ends. Paying April salaries will require assistance from the Unemployment Insurance Fund Covid-19 TERS programme,” the company said.
It said it also anticipated sales would be depressed for some time during the “Covid-19 Risk Adjusted Strategy” phase, which may last several months.
Edcon said last month it may not be able to re-open at the end of the national shutdown to combat the coronavirus outbreak. The 90-year-old Johannesburg retailer which owns Jet and Edgars chain stores grappled with a trading slump after Ramaphosa announced a national state of disaster in March.
It said in March that like-for-like sales had dropped 45% since Ramaphosa announced a national state of disaster. It said that March revenue would be R400 million below forecasts. Chief executive Grant Pattison told investors last month the company would not pay suppliers.
“The failure to meet the March sales targets, and the expected drop in collections of the debtor’s book, will mean that the business only has sufficient liquidity to pay salaries,” Pattison said last month.