Bain’s Edcon Loss Widens as Changes Disrupt Clothes SalesJanice Kew
Edcon Holdings Pty Ltd., a South African clothing retailer owned by Bain Capital Partners LLC, posted a wider annual loss as changes in stores and management disrupted sales.
Same-store retail sales growth slowed to 0.4 percent in the year through March, from 7.4 percent a year earlier, the Johannesburg-based company said in a statement today. Edcon’s net loss widened to 5.03 billion rand ($513 million), from 2 billion rand a year earlier.
“We have done extensive changes in more than 120 stores -- it’s been disruptive with some stores looking like construction sites,” Chief Executive Officer 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 105 basis points, or 1.05 percentage point, to 10.47 percent by 5:10 p.m. in Johannesburg, the biggest increase since Aug. 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 25 billion rand 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 percent in the year through March 2014, Schreiber said. The company had 1,233 outlets at the end of the reporting period, with the average retail space rising 3.4 percent.
Edcon said revenue generated in Africa outside its domestic market contributed 7.1 percent 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.