Bain’s Edcon Starts Talks on South African Head Office Job Cutsby
Losses will be at clothing retailer's Johannesburg head office
Retrenchments expected to be completed over the next month
Edcon Holdings Ltd. plans to cut jobs at its Johannesburg head office as South Africa’s largest clothing retailer seeks to revive sales and earnings.
While it’s too early to say how many positions will be lost, it will be fewer than the 2,000 reported on Monday by Johannesburg-based Business Report, Edcon spokeswoman Vuyo Mtawa said by phone. The company employs about 3,000 at its central office.
The move is designed to “reflect a simpler, more agile structure that positions us for growth,” the company said in an e-mailed response to questions. The process will be completed “around March” and employees of the company owned by U.S. private-equity firm Bain Capital Partners LLC will have the opportunity to apply for other positions, Mtawa said.
Edcon has struggled since its 25 billion-rand ($1.6 billion) purchase by Boston-based Bain in 2007 ladened the retailer with debt, while its flagship fashion chain Edgars has suffered declining market share.
Chief Executive Officer Bernie Brookes said Dec. 9 that Edcon’s executive team was reduced to nine from 17 while more head-office jobs would be eliminated in February and March.
The retailer announced on Nov. 30 that it had agreed with lenders to a debt refinancing that will see it reduce borrowings by 4.5 billion rand, easing the pressure on its balance sheet and enabling the company to pursue the turnaround plan.
Edcon is also seeing an improvement in credit sales after starting its own so-called second-look credit book in October 2014. This borrowing platform, which considers customers that failed to meet lending criteria stipulated by primary lender Barclays Africa Group Ltd., stands at about 200 million rand. The retailer’s loan approvals halved after Edcon sold its private-label store cards business to Barclays Plc’s Africa unit in 2012.
This reduction of head office staff comes a year after another round of job losses.