A South African based company, EDCON, the parent company of Jet and Edgars that have operations in Zambia, has indicated that it has experienced financial difficulties and it is compelled to critically review the business initiative. It has been impacted badly by the COVID-19 pandemic on the manufacturing and retail industry, which may likely result in a complete shutdown of Edcon.
Edcon CEO Grant Pattison broke down, telling suppliers the company only had sufficient liquidity to pay salaries.
The company said by the time lockdown began, it expected to be around R400 million below forecasted sales and cash for the month, and expected to lose a further R800 million in turnover during the 21-day lockdown. Edcon’s turnover has declined 45% in comparison to the same period last year. Edcon has been the weakest of the retailers and has been on life support for a long time. It had no safety net because it was in financial difficulty for a long time
In 2019, Edcon received a lifeline received a lifeline of R2.7 billion from the Public Investment Corporation and lenders, and rent reduction from landlords in return for equity to aid in restructuring its business model to restore competitiveness.
He said business rescue was one possible option. Furthermore, he foresees that, even if the business could survive, it would be heavily dependent on business support packages offered by government and other agencies and funders.
