Edcon loss widens as changes disrupt clothes sales
Edcon Holdings, owned by Bain Capital Partners, reported same store retail sales growth slowed to 0.4% in the year through March, from 7.4% a year earlier, the company said in a statement on Tuesday. Edcon’s net loss widened to R5.03-billion from R2-billion a year earlier.
“We have done extensive changes in more than 120 stores—it’s been disruptive with some stores looking like construction sites,” CEO Jurgen Schreiber said in a telephone interview from Johannesburg today. “We are already seeing the positive effects of these changes in the discount stores and expect the Edgars stores trading results to show improvement from September and October.”
The yield on Edcon’s euro-denominated bond due March 2018 rose for a fifth day, climbing 86 basis points, or 0.86 percentage point, to 10.27% by 12:20 p.m.
in Johannesburg, the biggest increase since August 11, 2011.
The weaker rand will result in higher clothing selling prices in the current fiscal year and may weigh on consumer demand, Schreiber said. South African retailers have reported weaker sales growth this year as rising unemployment and inflation put the brakes on consumer spending.
Bain Capital, based in Boston, bought Edcon for R25-billion in May 2007 to tap into rising economic growth in Africa’s largest economy.
Edcon, which owns chains including Edgars, Jet, CNA, Boardmans and Red Square, expects trading space to grow between 5 and 6% in the year through March 2014, Schreiber said. The company had 1233 outlets at the end of the reporting period, with the average retail space rising 3.4%.
Edcon said revenue generated in Africa outside its domestic market contributed 7.1% of retail sales in the quarter. The company, which also has stores in Botswana, Namibia, Swaziland, Lesotho, Mozambique and Zambia, plans to open 60 new stores in Africa outside its home market in the next three years, Schreiber said.
The rand slid 11 percent against the dollar last month, tumbling to a four-year low on May 31. – Bloomberg