Nike store. Picture: REUTERS
Nike store. Picture: REUTERS

Pepkor’s sale of men's clothing retailer John Craig has received approval from competition authorities, in a move that will save hundreds of jobs even after the group closed non-performing stores, resulting in job losses. 

Blue Falcon 188 Trading owns men’s footwear and clothing stores Studio 88 and Skipper Bar, which sell brand names such as Nike, Adidas‚ Ellese, Puma‚ Converse‚ Guess and Superga.

Studio 88 was started by entrepreneur Laurence Wernars.  

John Craig sells formal menswear and is the largest stockist of the Polo brand. But the store did not fit in well with Pepkor’s discount portfolio that includes Ackermans and Pep chains and middle-income clothing store Refinery.

The Competition Tribunal, which acts as an antitrust authority and approves all mergers, gave the deal the go-ahead on condition that Blue Falcon does not retrench any John Craig staff for the next two years. Those who had lost jobs as a result of store closures would be first in line when vacancies became available. 

Before the sale, John Craig had been underperforming and Pepkor’s attempt to launch and sell its own label, Muratti, failed as it was not popular with customers.

When they announced the sale, Pepkor said the market for formal wear had declined as people have been working from home.  

It said John Craig’s position in the market, focusing on branded smart and formal men’s clothing, did not leverage Pepkor’s core capabilities.

Blue Falcon stores’ success in selling aspirational and trendy brands would serve the John Craig customer base well.

The tribunal said in a release the sale would save 422 jobs. Initially, Pepkor had reported in 2020 that the sale could save about 500 jobs. Some senior managers have taken voluntary retrenchments and some non-performing John Craig stores had been closed.

Pepkor has not disclosed how many jobs were lost as a result of the closure of the stores or how many were shut.

In Pepkor’s 2020 annual report, it said it had 111 John Craig stores.

John Craig was housed in the specialty division of Pepkor, which included the brands Shoe City, Tekkie Town, Refinery and Dunns. Altogether, the brands employed 5,000 people in 934 stores. 

In 2020, Pepkor sold subsidiary the Building Company — which houses brands such as Timbercity, MacNeil and BUCO — to Cashbuild for R1.1bn, but this sale is still awaiting competition authorities approval.

The department of trade, industry & competition had raised a concern that the merger could reduce local procurement. There is a move by the department to require all SA retailers to buy a greater percentage of products locally.

Blue Falcon agreed to use its “best efforts” to procure the clothing it intends to offer at the John Craig stores from local manufacturers.

The two companies will be required to provide the competition commission with an annual detailed report on their compliance with the merger conditions for the next two years.

childk@businesslive.co.za

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