South African clothing chains Edgars and Jet have filed for bankruptcy, sending over 270 workers on the streets to add to the chaos with Coronavirus Pandemic.
In a notice to employees, EDCON Limited, the owner of Jets and Edgars clothing stores have applied for voluntary liquidation.
They say they are shutting down Jet and Edgars operations in Zambia because the stores have faced unprecedented financial challenges.
They claimed that the business is not making profits in Zambia.
One of the over 270 workers affected said in an interview that the South African bosses have already left the country leaving the workers stranded.
“The company has experienced unprecedented financial difficulties reflected in the poor performance, coupled with the expected massive impact of COVID-19 pandemic on the manufacturing and retail industry, which may likely result in a complete shutdown of EDCON Ltd (in South Africa). We were compelled to critically review our business initiatives, retail footprints and store portfolios,” reads the letter in part.
“Our operations in other territories in Africa could not escape this critical review. In Zambia, the majority of our stores are not profitable in either of our brands (Jet and Edgars) and combined, they recorded a moving annual negative EBIT of R21.3m as at the end of January this 2020.”
The letter also highlighted some factors contributing to the loss as property rentals which were paid in US dollars and South African rands, the requirement to implement computer hardware for the real-time monitoring of the sales at a cost of “+R3.5m as well as the cost associated with the supplying of stock to the Zambian operators.
It further stated that the company had considered all possible options in trying to sustain the operation from South Africa without placing EDCON South Africa in more financial hardships.
However, the letter clarified that the company has been unable to secure any significant assistance from the landlords or other key stakeholders in Zambia in that regard.
“It is therefore with regret that we have to inform you that we will apply for a creditor led liquidation in terms of Section 95 (1) of the Corporate Insolvency Act, No, 9 of 2017. The creditor’s meeting will be held on 24 April 2020, where the creditor’s resolution to liquidate the company will be put to the creditors of the company and passed. Meetings will be scheduled with management at which matter of staff welfare will be addressed. PWC have been appointed to manage the process with the assistance of Musa Dudhia and company (attorney).”
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