Edcon has shut its underperforming two-floor Edgars store in the popular Rosebank Mall as the retailer struggles to return to profitability.
The closure of the 5,971m² store — equivalent to about 70% of the size of a large rugby field — is one of the first Edgars outlets to shut its doors in a high-end mall.
Rosebank is a sought-after retail area in Johannesburg and the mall’s owner, JSE-listed Hyprop Investments, said that it rivalled Sandton as a live, work and play area.
In 2019, Edcon closed about 150 underperforming Jet, Edgars and CNA stores in its bid to save the company after a R2.7bn bailout by the Public Investment Corporation in 2018 and a
40% rent reduction by most
mall landlords.
Edcon faced imminent collapse at the end of 2018 after multiple failed restructuring programmes as it crumbled under huge levels of dollar-denominated debt and interest payments. Trouble started after private equity firm Bain delisted it in 2007 at a cost of R25bn, borrowed in foreign currency.
Mike Elliott, CEO of Edgars, said on Thursday that Edcon would continue to close or reduce the size of "underperforming" stores, including some Jet and CNA outlets, as this was "instrumental" to its turnaround strategy.
Jobs saved
Edgars said it had saved all nonmanagement Rosebank store employees’ jobs by moving staff to other stores.
Hyprop has already filled about half the space vacated by the clothing and accessories arm of Edcon with a store called Crazy Plastics and the expansion of an existing Ackermans shop.
Edgars Home, Edgars Beauty (formerly Red Square), Jet, CNA and TW Lewin remained Edcon tenants at Rosebank Mall, Hyprop said.
Edgars, once a highly profitable clothing retailer, faces growing competition from international brands Cotton On, H&M and Zara in a sluggish economy.
Hyprop has just more than 9,600m² of vacant space in all its retail malls due to Edcon store closures. The closure of Rosebank Mall’s Edgars store amounts to about 5% of the Rosebank Mall’s gross letting area, said CEO Morné Wilken.
He said Rosebank Mall was viable and more visitors were expected as development and construction in the area was completed. "This should increase footfall to levels exceeding what was recorded before the development in the area increased, resulting in a positive impact in our trading density."
In fact, Hyprop has just bought more property in the Rosebank area, although it said details were yet to be released.
Wilken said: "As part of our bigger vision, we have also purchased an additional property that will form part of the bigger Rosebank mixed-use precinct ... which has the mall at its core."
Landlords that reduced their rental fees or injected liquidity into Edcon to help it survive continue to reduce exposure to the retailer’s stores.
Listed property company Resilient, which owns the Jabulani Mall and Irene Mall, offered a 40.9% rental reduction in
2019 and 2020. In its latest annual report Resilient calls Edcon a business risk as the stores take up "6.4% of its total rental income".
SA’s largest listed property company, Growthpoint Properties, which owns Rustenburg’s Waterfall Mall and The Constantia Village Mall in Cape Town, wrote off R110m and said in an annual report that it had reduced its total Edcon space in the 2019 year by about 5,000m², down from 77,068m² to 72,258m².
Redefine Properties, which owns the Maponya Mall in Soweto, said in its most recent annual report it had reduced its exposure to the group by 11,474m² to 71, 223m² in August, with a potential further reduction of 8,961m² planned by the end of 2019.
Liberty 2 Degrees, owner of Sandton City, said in its latest annual report that it wanted to reduce its exposure to Edcon from 5.3% to 4.3% of its total gross letting area by the end
of 2019.
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