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EDINBURGH — Edcon, owner of troubled retailers Edgars and Jet, is asking South Africa’s big shopping mall owners to chop rent. Without this concession, the company could be put into liquidation. Tens of thousands of jobs are at stake. The company is in trouble because consumer spending is down after years of economic stress. The company’s woes are symptomatic of an entire sector under pressure. SA Property Insider has reported on how many retailers are struggling across the country. Landlords, meanwhile, have been discussing how to give them breathing space, including reducing shop sizes and helping retailers with marketing strategies to attract more customers. – Jackie Cameron
(Bloomberg) – Edcon Holdings Ltd. asked owners of South African malls in which it operates for a 41% reduction in rent as its seeks to secure funding to stave off liquidation, the Sunday Times reported.
The company that owns chains including Edgars and Jet offered a 5% stake in the business in exchange for a two-year agreement on rentals, the Johannesburg-based newspaper said, citing a letter to landlords. This would help Edcon secure R1.9bn ($132m) in emergency funding from banks and the Public Investment Corp., it said.
The 89-year-old company, South Africa’s biggest non-food retailer, has long struggled to stay afloat amid weak consumer spending and economic growth in South Africa, and had to be taken over by banks and bondholders in 2016 to avoid collapse. It announced this year plans to close some chains and to cut floor space by 17% over five years.
With more than 14,000 permanent employees, Edcon is a significant employer in a country where more than one in four people are out of work.
Edcon confirmed that it’s in the final stages of talks with landlords and suppliers and that “significant progress” was being made, adding it was seeing good sales in December.
“We are very close to announcing a complete recapitalisation of the business that should endure for the next few years,” the company said in an emailed statement. “There are various options being considered by all stakeholders with certain mall-owners and landlords assessing Edcon’s rent-reduction proposal.”
Edcon management met with major landlords on Dec. 7 in Johannesburg, the Sunday Times said.