Listed retailer Edgars Consolidated Stores (Edcon), already South Africa’s largest retail group by turnover, has acquired the business of Boardmans from fellow retailer Pick ‘n Pay for approximately R94-million, the two groups announced on Friday.
Boardmans sells a wide range of furniture and home furnishings such as kitchen-, bed- and bathware. It is the second major acquisition by Edcon in 2003, following its purchase of more than 100 CNA stores, selling stationery, books and other print and paper goods, earlier in the year. Edcon currently trades under the store brands Edgars, Jet, Sales House, Cuthberts, ABC, Red Square, CNA and Supermart.
Edcon chief executive Steve Ross said that the purchase will be made using Edcon’s cash resources. He said the impact of Boardmans to Edcon’s existing revenue will be minimal at 2%, but expected the acquisition to be earnings-enhancing within the next three years.
Boardmans trades out of 26 stores countrywide, with a selling area of 30 000 square metres. Turnover was R211-million for the year ended February 2003, with a sales mix comprising predominantly kitchenware, furniture and outdoor goods, with soft goods (bedding, towels, curtains and the likes) contributing 4% of sales.
Boardmans complements the homewares business of the Edgars chain, Ross said, which has an annual turnover of about R250-million, comprising almost exclusively soft goods. Boardmans has a well-established brand name, with stores in prime locations that would give Edcon an immediate presence in the homewares segment of the market.
“The purchase of Boardmans supports our strategy of making select acquisitions of reasonably priced businesses in the non-food retail area and we are very excited about the potential for growth from bringing Boardmans into the Edcon group,” Ross said.
Boardmans has a similar target market to that of the Edgars chain, he added.
“Edcon will now be in a position to offer our existing customers a greater selection of merchandise. We also plan to extend credit to Boardmans customers, thereby providing them with an additional service from the Edcon group, as well as enhancing our existing financial services business,” he explained.
“Moving forward we will seek to leverage off Edcon’s existing IT and distribution platforms as well as the finance, human resources and marketing divisions run out of our head office.”
All Boardmans staff will be retained with no change to their employment status or conditions — “an important consideration in the sale of Boardmans”.
The financial effect on Edcon shareholders is not considered to be material in the short term, Ross added. The acquisition is subject to the assignment or subletting of certain leases to Edcon and to approval by the competition authorities.
The effective date is April 1 2004, if the conditions have been fulfilled by March 15 2004, and if not, will be the third Monday of the month following the fulfilment of the last of the conditions. — I-Net Bridge