Distressed retailer West Pack has finally secured a buyer after more than a year in business rescue.
The company has been acquired by a group of individual buyers, securing the future of the brand and its network of stores across SA.
The company told Business Day that the deal marked a fresh chapter for the retailer, which has faced financial challenges over the past year, landing it in business rescue.
Legal adviser Michael Hartman said the deal would ensure continued stability and a renewed focus on growth and customer service.
West Pack Franchise is part of a group of eight related companies, including West Pack Lifestyle, Petzone and Café Estreito, that previously shared the same ownership and management though they are not formally consolidated under a holding company. They are divided into two divisions, West Pack Corporate and West Pack Franchise.
The companies entered business rescue in May 2024 due to “financial distress”. They were strained by similar challenges, but all companies had their own creditors and debts that caused their distress.
Hartman said West Pack Franchise in particular entered business rescue due to rising financial pressure, largely from unpaid leases with landlords. These creditors included Absa and Investec as well as Redefine and Growth Point Properties.
The franchise stores managed to maintain customer loyalty and steady sales throughout the rescue process, he said.
“The West Pack Franchise division is composed of individually owned stores operated by passionate franchisees, all of whom work in alignment with the ethos of the West Pack brand,” Hartman said.
“There are 66 franchisee-owned stores, with several additional locations being actively explored and planned due to strong demand for the West Pack offering. This reflects the ongoing success and potential for growth of the brand.”
Meanwhile, West Pack Corporate, including West Pack Lifestyle, was sold separately to an individual investor on April 15.
The corporate division, which also entered business rescue in May 2024, owing more than R118m to creditors including Absa, Access Bank and Preference Capital, faced several challenges including poor stock availability, high debt and operational systems that had not kept up with the company’s rapid growth.
According to the business rescue documents, both divisions of the brand suffered the same challenges.
Despite these issues, the rescue process for Lifestyle preserved more than 1,100 jobs.
Hartman said the franchise and corporate divisions were expected to fall under the expanded franchise model, with big investment planned to restock stores and improve operations.
“West Pack will continue to prioritise and expand its franchise model, focusing on strengthening the brand in regions where we have limited or no exposure. We also offer exciting opportunities for new franchisees to open stores or acquire existing ones at highly competitive prices, making it a great time to join the West Pack family.”
The company found itself in trouble after it pursued an aggressive growth strategy, which burdened it with much debt, which put a strain on cash flow and led to high inventory levels due to an “incorrect product mix”.
“Financial systems and procedures … have not managed to mature and develop at the same speed as the group has grown and have thus not been able to support the complexities of such a large group of businesses, with various interdependencies,” CEO Jose Da Silva said in a sworn statement starting the business rescue process.
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