How Edcon’s survival will avert retail apocalypse
Fund mangers believe the company’s failure would cause systemic problems across the SA retail sector and the economy as a whole
Listed property fund managers are hopeful that the rescue mission at SA’s largest clothing retailer, Edcon, is an isolated case and that other retailers will not have to beg landlords and investors for rental reductions or cash injections. Edcon is a large employer, with 40,000 staff, while its operations also affect numerous suppliers and 100,000 workers indirectly. A number of the landlords where Edcon rents stores have assisted it by either granting a rent reduction or by investing cash, both in exchange for equity. Edcon also achieved a recapitalisation deal worth R2.7bn at the end of February. These funds were raised by some of SA’s biggest landlords, banks and the Public Investment Corporation (PIC). Property analysts and fund managers argue that it is in the national interest for Edcon to survive. Edcon has been battling to save jobs following some poor strategic decisions and mounting competition from newer retailers who have eaten into its market share over the past decade....
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