Edcon pursues higher-margin local products
By Nick Hedley - Jul 10th, 07:43
Edcon says its shelves will increasingly be stocked with locally sourced house brands, as the struggling clothing retailer continues to unwind its foreign-brand strategy.
The group, which in June shut its flagship Topshop store in Sandton, was assessing how to position the British fashion chain in SA "in formats that are more viable", said Vannie Pillay, executive for group corporate affairs and communications.
Edcon has largely reversed an earlier decision to bring multinational brands to SA, having already exited chains including River Island, Tom Tailor and Lucky Brand. Many of these brands struggled to gain traction in SA’s weak economy, prompting Edcon to focus more on its higher-margin local products.
Pillay said that in line with the shift towards private-label products, Edcon had increased its manufacturing capacity at its Celrose and Eddels facilities in KwaZulu-Natal.
The company, which is now headed by former Massmart CEO Grant Pattison and employs about 48,000 staff, wanted to source more products locally and planned to bolster its local supplier base, Pillay said.
At the same time, Edcon would also trim its portfolio. The group planned to cut its trading space from 1.5-million square metres to 1.25-million square metres within four years.
It would do this by merging the Jet and Jet Mart outlets under the Jet brand.
It would also move its Red Square and Boardmans chains into Edgars stores and rebrand them as Edgars Beauty and Edgars Home, respectively.
But it would keep stand-alone Edgars Beauty and Edgars Home stores in malls that did not have Edgars shops.
"Edcon is now largely focused on a strategy of space density, and where brands merge most employees will move as well," Pillay said. This could lead to job losses, "but this will be kept to a minimum as the current employee complement is already fairly lean".
Pillay said Edcon, which at last count had net debt of about R4bn, was adequately capitalised for the time being, although it was in talks with its lenders about its debt structure.
"Edcon will provide updates if and when debt arrangements are changed."
Meanwhile, Pillay said no decision had been made regarding the future of Edcon’s rest-of-Africa business.Business Live
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