Looks like the PIC is going to blow R3bn on ‘saving’ Edcon
CEO says cash can keep retailer alive for two years, but fears are that no amount of time or money can fix it
Though details are still sketchy, it looks likely the Public Investment Corporation will provide troubled clothing retailer Edcon with as much as R3bn in funding.
If the deal goes ahead it would be the second bailout Edcon has negotiated since delisting in 2007, and there’s a view that even if it gets the money it’s just postponing its inevitable demise.
It does have some time to prove its detractors wrong. Edcon CEO Grant Pattison is on record saying that a possible deal could support it for about two years.
But even with a two year runway, the issues Edcon has to tackle are daunting. It has to come up with an effective online sales strategy, provide a range of products better suited to cash-strapped consumers, and also face off against international competitors such as H&M and Zara.
In a nutshell, Edcon is struggling because consumers don’t want to spend money at its stores, and now have a lot more options where they can buy clothes.
Edcon, however, is not the only struggling clothing retailer. Recent trading updates covering the festive season from listed clothing retailers Mr Price, Woolworths and Truworths showed that the sector as a whole was not adapting well to a difficult environment.
Even so, Edcon’s problems are particularly acute and though two years seems like enough time to turn itself around, there is also a growing fear that no amount of time or money can fix it.