UNLISTED clothing retailer Edcon on Monday said sales for the 13-week period ended December 29 are expected to be between R8.3bn and R8.38bn, compared with R8.39bn a year earlier.
The decrease was due to delays in stock delivery and lower cellphone sales in its discount division, the discontinuation of its Discom brand, and refurbishments and merchandise improvements at its Edgars division.
Same-store sales are expected to be lower by 3.4%-3.5%.
Gryphon Asset Management CEO and chief analyst Abri du Plessis said: "This is not a good result. It’s proof of the tough retail environment which we’ve seen from many of the other retailers. For Edcon, having problems other than the tougher economic environment, it’s going to be quite an uphill battle. "
Sales in its flagship Edgars chain are expected to be between R4.52bn and R4.56bn for the 13-week period, compared with R4.37bn previously, and same-store sales are expected to be 2.1%-2.2% lower. Edcon has spent R65m revamping 72 Edgars stores, while beefing up its merchandising processes. The second phase for Edgars includes rolling out "stores-in-store" devoted to international brands such as Topshop. Total investment for this phase is about R300m.
Edcon has underperformed its peers since its highly leveraged private equity buyout in 2007 by US-based Bain Capital. Six years on, Edcon is still saddled with debt to the tune of about R25bn.
CEO Jurgen Schreiber said on Monday Edcon had secured a R4bn term loan with a syndicate of local and international banks to pay down debt. The R8.8bn injected since Absa took over Edcon’s store-card book in June last year would also allow it to reduce debt, he said. There is speculation that Edcon will return to the JSE, and analysts believe its transitional projects are part of the listing process.