Edgars’ mother company, Edcon Limited, says it may cull some local stores as part of a restructuring process.
The group, which has 43 Stores in Namibia across the different Brands – Edgars, Jet, CAN and Edgars Active – and employs about 700 employees, both fulltime and part-time, could also record some job losses in the process.
“Critical to Edcon’s turnaround strategy is our store rationalisation programme, which is applicable to Namibia as well,” Edcon’s Corporate Affairs and Communication Department said in response to a query by the Windhoek Observer this week.
“This programme is a long-term strategy which is aimed at delivering a more efficient store portfolio and includes decisions on space reductions, store closures and store formats, which are made in line with trading conditions, lease renewals and further aimed at increasing trading densities.”
With the process already on-going, the clothing retailer said the local operations which contributes around 44 percent of revenue outside of South Africa, were yet to be affected.
“There has been no effect on the operations in Namibia thus far. We remain committed to the Namibian market with our Edgars, Jet, and CNA and thank U brands.”
The announcement by Edcon comes as the local retail sector is struggling due to depressed consumer spent, attributed to the economic down turn.
According to the Bank of Namibia 2017 Annual Report, the real value addition in the wholesale and retail trade sector is estimated to have contracted by 6.4 percent in 2017, compared to a modest growth of 2.5 percent during 2016.
The yearly decline, according to the apex bank, was mainly due to low domestic demand, stemming from slower economic activity.
“The economic slowdown and increased competition within Namibia certainly has had an effect on performance within this country and results have been below expectation,” Edcon said.
Edcon announced on 1 June that it had entered into a N$500 million bridging facility, which provides assurance for adequate shorter-term cash flow requirements.
“Edcon has entered into a bridge financing agreement to meet its near-term liquidity requirements while a longer-term strategy for a comprehensive restructuring of the group’s entire capital structure is agreed,” the announcement said.
Early this year, the group allowed for the incurrence of up to an additional N$1 billion of credit facilities and for current stakeholders of the group to participate in the financing.
The bridge facility will consist of two tranches; one denominated in euro and the other in South African rand, and will mature on 30 September 2018.
Edcon is southern Africa’s largest non-food retailer. It has been in operation for more than 80 years and have expanded its footprint to 1,292 stores as at 23 December 2017, including 186 stores in eight countries outside of South Africa.
Edcon’s primary operations are in South Africa where it generated 89 percent of its retail sales in financial year 2017.
The rest of its operations are in Namibia, Botswana, Lesotho, Swaziland, Mozambique, Ghana, Zimbabwe and Zambia.
Edgars Zimbabwe is managed independently and accounted for as a separate division.