Image: SIPHIWE SIBEKO/REUTERS
The owner of Legit, Beaver Canoe and Style stores, Retailability, has made an offer for parts of Edgars, the business rescue practitioners announced on Tuesday.
Retailability bought Legit clothing stores from Edgars for R637m in 2016 and runs more than 460 clothing stores across SA, Namibia, Botswana, Lesotho and Eswatini (Swaziland).
The Edcon business rescue practitioners said they had signed a “heads of agreement” to sell parts of Edgars to Retailability, but the sale would be subject to various conditions precedent and regulatory approvals, including the competition authorities.
Edcon, owner of Jet and Edgars, and employer of 17,200 people, was placed in business rescue at the end of April after it could not pay suppliers because of weak January sales and a loss of R2bn in trade when stores were closed during the Covid-19 lockdown.
Edcon owes secured and unsecured suppliers more than R8bn.
Business rescue practitioners Lance Schapiro and Piers Marsden did not say how many Edgars stores were being sold and which ones would be closed, nor did they disclose the value of the deal.
They also did not specify which parts of the group were being disposed of, amid reports that Jet, which has a low-cost offering, was regarded by analysts as a prized asset.
The details of the transaction would be finalised on the signing of definitive agreements and fulfilment of conditions.
The pair said the sale of Edgars would “ensure the growth and continuity of a proudly South African Edgars brand,” and also save a “significant number” of jobs.
The terms of the potential sale had been presented to stakeholders at various business rescue committee meetings.
Schapiro and Marsden said they were unable to find a single buyer for all of Edgars.
However, their press release suggested they were in “complex transactions” to sell parts of the Edcon business that were at “advanced stages”.
The speed of the process is to ensure new owners of the clothing brands can order summer stock in good time.
BusinessLIVE reported on June 28 that any would-be buyer interested in Edcon would consider the Jet brand the prize asset because of its low price-point entry and could seek to acquire it separately from Edgars.
The problem, though, was disentangling Jet from the less attractive Edgars, which independent analyst Chris Gilmour said at the time would be “nearly impossible” because their systems were so inextricably linked. — BusinessLIVE