22,000 Edcon employees get retrenchment notices

Jet, which is owned by the Edcon Group, has experienced a tumbling in sales it attributes to the hard lockdown. / Gallo Images / Papi Morake
Jet, which is owned by the Edcon Group, has experienced a tumbling in sales it attributes to the hard lockdown. / Gallo Images / Papi Morake

SA's biggest non-food retailer Edcon has served 22,000 of its employees with notices of retrenchments as it blames load-shedding and the initial 45-day hard lockdown for its collapse.

The troubled Edcon Holdings, which owns Edgars and Jet among others, is now seeking buyers as it struggles to stay afloat due to debt and poor sales.

On Thursday, Edcon's 22,000 workers were served with retrenchment notices by the company's business rescue practitioners (BRPs), as the 90-year old company tries to avoid being liquidated.

An employee who has been working for Edgars for more than 10 years blamed their struggles on the company shifting focus onto its financial services which brought in "easy millions of rands".

"Edcon's core business is selling clothes but we found ourselves with shortages of stock in many of our stores, especially smaller ones because we lost focus and this was bound to affect our sales in general," said the employee who asked not to be named.

Another employee said she had already updated her CV and was sending it out looking for another job. "I'm very scared, I'm in fear because I don't really understand what's really happening but it's clear that our jobs are on the line."

In March, Edcon announced that it is now officially under business rescue, explaining it has lost R2bn in sales since March 15 and was now unable to pay its suppliers for both the March and April month-ends.

The retrenchment notice, dated June 10, addressed to all employees and labour union SA Commercial, Catering and Allied Workers Union (Saccawu) stated the company's 2019 restructuring plan which included sourcing R2.7bn from among others the Public Investment Corporation was on track until the end of December 2019.

"The company's financial position has recently become distressed due to the following; poor sales... the recession in the South African economy, exacerbated by frequent load-shedding which disrupted purchasing patterns," it said.

It also indicated that its business plan suffered as "the advent of the Covid-19 pandemic which resulted in the government announcing and implementing measures, including the initial 45-day hard lockdown period which prohibited trading of nonessential products."

Saccawu's secretariat coordinator Lucas Ramatlhodi said the union felt the decision to put Edcon under business rescue was "very premature".

"The company had received a cash injection in a form of a bailout [from the PIC] in the very recent past, we still haven't received a feedback in terms of how the bailout had assisted in terms of turning the company around."

He said they have raised these concerns with trade, industry and competition minister Ebrahim Patel.

"We lack confidence because we don't know of success stories out of a business rescue, what we know is an end result. of cutting jobs and ultimately collapsing the company ." Ramatlhodi said.

Lance Schapiro, one of the two business rescue practitioners, said their plan was still in its preliminary phase.

"As at today no binding offers have been received and therefore we cannot predict which parts of Edcon will be successfully sold. Therefore, it is prudent to start consultations with all employees in terms of section 189 and then, should an offer be received, accepted and implemented, those affected employees would be. transferred to the new owners." Schapiro said the intention was to sell the entire business. "This would result in a significant number of jobs being saved. A sale of parts of the business will result in job losses."

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