Edcon to hire 2 000 new staff, cut prices

Edcon plans to increase its workforce by almost 7% and slash prices as South Africa’s largest clothing retailer launches a recovery plan following the exit of US private equity firm Bain Capital Partners.

The owner of the Edgars and Jet chains was seeking to lure customers back to its stores with more than 2 000 new staff specifically trained in the clothing ranges in their departments, chief executive Bernie Brookes said.

The move will help to undo the effect of job cuts made by Edcon as it struggled under a debt burden caused by Bain’s R25-billion purchase in 2007.

“We must be the only valueadded department store in the world where you self-serve shoes, when what you really want is somebody to come and fit them and make sure they are the right size,” Brookes said.

“I expect by the time we finish we will end up putting 2 500 people back into the stores to provide good customer service.”

About a fifth of those could come from stores Edcon was closing, he said, while the rest would be hired.

Brookes is embarking on a four-year turnaround plan after Bain handed ownership of Edcon to creditors, including Franklin Templeton of the US, in a debt-for-equity swap, reducing the debt burden to R6-billion from R26.7-billion.

The 87-year-old retailer, which employs about 30 000 people outside peak season, had seen sales decline in its more than 1 500 stores while managing the business largely to make debt repayments, Brookes said.

The company would also cut prices and accept a lower profit margin on clothing to increase sales and compete in a market toughened by the entry of overseas retailers such as Hennes & Mauritz and Inditexowned Zara, Brookes said.

Brookes joined Edcon a year ago, after previously running Melbourne-based department store Myer.

South African consumer confidence has been hurt by an unemployment rate of 27% while economic growth is expected to slow to 0.1% this year, according to the IMF.

Retail sales grew at the slowest pace in more than two years in July, and Edcon reported an 8.1% drop in first-quarter sales to R6-billion.

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