When little-known brand Retailability bought the much bigger, ailing Edgars, it put its future on the line, CEO Norman Drieselmann said.
In September 2020, Retailability owned just more than 460 Beaver Canoe, Legit and Style clothing stores in Namibia, Eswatini, SA and Botswana when it took a gamble and bought Edgars out of business rescue.
Edgars had been struggling with large stores, high costs and a limited credit book for years and two internal rescue attempts involving landlords discounting rents in 2017 and 2019 had failed.
But Drieselmann felt Edgars had customers’ brand loyalty and was worth the risk.
“Edgars was four times bigger than what we were, so it was a classic case of David trying to tame Goliath. If we didn’t get it right, it would have sunk our whole business,” he said.
The pressure pushed his management team to make tough, fast decisions to turn the business around, he said.
Recently Edgars’ profits surpassed those of the rest of Retailability, he said, but there is more to be done.
Former CEO Grant Pattison was recorded tearfully in March 2020 informing suppliers that the company had run out of money to pay them, with only enough cash for salaries.
Edgars became the first major casualty of the pandemic.
When Retailability acquired Edgars, it left behind 65 stores, cutting some suppliers, and letting go of about 500 staff members. It managed to save 7,200 jobs and take the best 120 stores.
As Retailability had in 2016 bought discount fashion retailer Legit from Edgars, the management team was experienced at working together at a turnaround, Drieselmann said.
Empty stores
Lender RCS acquired the Edgars credit book and quietly added interest to the six-month interest-free accounts, leading to customer outrage and negative media coverage.
On top of bad publicity stores were quite empty.
Though stock can be ordered as much up to six months in advance from abroad, Edgars’ struggling condition during lockdown and the business rescue process left the stores without enough items to sell.
Retailability scrambled to find stock.
The team had to make a few educated guesses about what to buy, investing R900,000 to buy apparel, while trying to avoid repeating previous fashion mistakes. Edgars’ outdated IT systems didn’t give them the data they needed.
Retailability cut Edgars’ clothing prices 12% and focused on offering more fashionable clothing. The percentage of private label brands such as Stone Harbour and Kelso were increased, while the team cut certain international fashion brands and baby accessories out of the business.
Over 18 months it upgraded signage, in-store lighting, the changing rooms and the checkout experience.
These efforts resulted in 5.5% comparable sales growth and a 12.5% revenue growth in the most recent financial year, leading to increased profitability.
Drieselmann said he is excited that this means the next round of big changes will be funded by Edgars itself.
With the basics of retail in place, it is working to add more premium local brands to its private label offering and its limited international brands. It acquired the Tread and Miller brand after the chain closed in January, and has recently bought 20 Keedo children’s clothing stores from the Cape Union Mart owner.
It brought back the once-popular local Hilton Weiner, Vertigo, Urban and Aca Joe brands that had gone out of business.
Drieselmann said the SA fashion business is becoming more competitive in a tough economy, and load-shedding keeps consumers away from stores. But Edgars’ continued success means they have a place in customers’ minds, Drieselmann said. “And that’s encouraging.”
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