Edcon Loss Narrows in Second Quarter as Discount Sales RiseJanice Kew
Edcon Holdings (Pty) Ltd., South Africa’s largest clothing retailer, said second-quarter sales rose and losses narrowed as trading at lower-price units improved and the company introduced new international brands.
The loss was 724 million rand ($71 million) in the three months to Sept. 28, versus a restated 2.7 billion-rand loss a year earlier, the Johannesburg-based company said in a statement today. Retail sales advanced 5.9 percent to 6 billion rand. Cash sales grew 17.4 percent, it said.
The refurbishment of 72 stores in the Edgars chain is “almost complete, although the heavy-build element of this program still negatively affected results,” said the company, controlled by U.S. private-equity firm Bain Capital Partners LLC. The discount division, which includes the Jet chain, “delivered a good sales and profitability performance,” with same-store sales rising 4.9 percent.
Bain, based in Boston, bought Edcon in 2007 for 25 billion rand in an effort to tap rising consumer spending in Africa’s largest economy. Edcon, which owns chains including CNA, Boardmans and Red Square, has been revamping stores in an effort to regain market share. South African retail sales grew 0.2 percent in September, the slowest pace since December 2009, as inflationary pressures curbed spending.
The rollout of brands such as T.M. Lewin, Dune London, Tom Tailor, Lucky Brand, and Lipsy has started to gain momentum, Chief Executive Officer Jurgen Schreiber said.
Truworths International Ltd., a competitor, said Nov. 7 sales for the 18 weeks through Nov. 3 rose 7 percent. The Foschini Group Ltd., another apparel retailer, said fiscal first-half sales through September climbed 9 percent.
Edcon, which also has stores in Botswana, Namibia, Swaziland, Lesotho, Mozambique and Zambia, said revenue generated in Africa outside of its domestic market contributed 11.4 percent of retail sales in the quarter. Edcon plans to open stores in Nigeria and Ghana in the second half of next year, Schreiber said. The company will open Jet outlets in Nigeria, while in Ghana it will also open Edgars stores, he said.
The yield on Edcon’s euro-denominated bond due March 2018 fell for a sixth day, sliding 14 basis points, or 0.14 percentage point, to 8.40 percent by 11:59 p.m. in Johannesburg.