If the clothing store group Edcon cannot be saved, a flood of clothing will be on sale that is likely to disrupt the clothing market for a month or two.
Edcon’s business rescuers are talking to potential buyers to buy the entire company or separate stores, especially Edgars and Jet.
Anthony Thunström, CEO of TFG (which includes Foschini), said on Thursday they were not at all interested in the group or the Edgars or Jet parts.
He says Edgars is a department store and it’s the opposite of what Foschini’s business model is.
“Department stores are also the biggest losers in the shift to online sales.”
According to him, Jet is probably the most attractive shopping group of the two because cheaper clothing is sold there.
He says the problem with Jet and Edgars is that they have the same head office in Johannesburg and that they share IT and logistics services.
“It is not profitable for us to try to unbundle the business and the head office is in Johannesburg, while we are in Cape Town.”
Asked whether Edcon will soon flood the market with bargains to sell its stock, he says it will depend on whether the business can be bought out or not.
“If the business is bought out, the market is unlikely to be flooded with clothing, but in the unfortunate event that it does not happen and the business is closed, there will be a flood of stock in the market.”
He says it will probably be at a big discount for one to two months and it will affect the market.
According to Thunström, the local clothing market is already characterized by very large discount prices.
Edcon has attracted interest from 19 prospective buyers and is currently shortlisting 15 through the further process.
The interested parties must submit their offer at the end of June and a binding agreement with the successful buyers must be concluded in early July.
The business rescuers announced on June 8th the business rescue process is taking place through an accelerated sales process.
It seems the business rescue plan aims to finish everything by the end of August. The rest of the assets will be sold in the two months, including the stock. The last salaries will still be paid in the two months.
Edcon also began a consultation process with its staff last week for possible retrenchments pending the success of the sale of the businesses.
The business rescuers said in court documents that Edcon has more than 23,000 staff and that the business rescue process seeks to save as many jobs as possible.