Stuttafords is closing stores
LIQUIDATION: RESCUERS STILL BATTLING TO AVOID WORST SCENARIO AS THREE STORES ARE SCUPPERED
Struggling retailer shuts three of its biggest department stores as it battles to fend off liquidation.
Johannesburg’s Clearwater and Rosebank Mall and Canal Walk Shopping Centre in Cape Town don’t house the brand anymore.
Stuttafords has shut three department stores as the struggling retailer stages a battle to fend off liquidation. The 159-year-old retailer begun shutting stores last week at Johannesburg’s Clearwater and Rosebank Malls and Canal Walk Shopping Centre in Cape Town, reducing its department store footprint from nine to six.
Skeleton presence
Stuttafords has also shut two of its 14 mono-brand stores (brands with own stand-alone stores) but has kept its three stores outside SA (two in Botswana and one in Namibia).
It’s unclear how many job losses will be incurred from the closures. It employs 763 people and has retrenched 50 since its voluntary business rescue on October 28.
Before the closures, Stuttafords launched a slew of promotions – a mix of 50% discounts and three-for-two promotions – to raise money to purchase winter stock.
Stuttafords CEO Robert Amoils said the store closures were necessary to accommodate the retailer’s infrastructure and store footprint. He said Stuttafords landlords and suppliers supported the closures.
SA’s furniture family Ellerine Brothers, which co-owns Canal Walk with Hyprop Investments, repeatedly said during business rescue proceedings it had a “better tenant” willing to pay higher rentals for Stuttafords’ prime retail space.
Sources say Canal Walk management has tried to evict Stuttafords from the shopping mall for several months to replace it with Swedish fashion retailer H&M.
Ellerines, which owns a 26.4% stake in Stuttafords Stores (Stuttafords’ parent company), recently aborted a plan to feed R12 million into the retailer, citing difficulties in accessing its financial records to determine its viability. This derailed Stuttafords’ rescue.
Letter exchanges between attorneys representing rescue practitioners Neil Miller and John Evans, and Ellerines, show the latter wanted Stuttafords liquidated.
A new rescue plan was submitted to creditors and shareholders this week. Creditors, which include Levi Strauss, L’Oréal SA, Tommy Hilfiger, Polo, Puma, Adidas, Estée Lauder and others, are collectively owed R836 million.
The new rescue plan (the fourth) proposes creditors only get four cents for every R1 and an additional 21 cents over a period of 18 months, nearly a 75% writeoff on their debt.
The payout to creditors will be funded from new debt facilities from Nedbank and other institutions and proceeds from buyers that sign up for new equity. If the new rescue plan is not objected to by shareholders and creditors by May 31 it will be adopted.
Diminishing returns
An alternative rescue plan suggests selling Stuttafords’ assets. Then creditors will only be paid three cents for every R1 and won’t qualify for an additional payout (21 cents). Creditors whose debt is secured against Stuttafords’ assets, like Nedbank, would qualify for a 90 cents payout for every R1 owed. The rescue practitioners want to avoid liquidation. In liquidation, the SA Revenue Service would be the first to receive money owed (R28 million).