Edcon retrenches 22,000 employees

The largest non-food retailer in South Africa, Edcon, has served 22,000 of its employees with retrenchment notices.  The group’s business rescue practitioners (BRP’s) took the step to avoid the 90-year-old company being liquidated.  Edcon blamed load-shedding and the initial 45-day level 5 lockdown for its poor performance and decrease in sales.  An employee, who asked to remain anonymous, said that the company stopped focusing on clothes and shifted more towards financial services.  “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.”   The SA Commercial, Catering, and Allied Workers Union (Saccawu) also received notice of the retrenchments and Secretariat coordinator, Lucas Ramatlhodi, responded that the decision to put the company in business rescue was 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,” Ramatlhodi said.  “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 .”  Lance Schapiro, one of the business rescue practitioners said that their plan was still in the 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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