Shoprite to take over store leases of Ellerines
Proposal a relief for landlords and axed workers
SHOPRITE would take over the leases of some stores run by 45year-old furniture retailer Ellerines, which is being forced to close down, the retailing giant said yesterday.
Ellerines went bankrupt in August after parent company African Bank Investments Limited failed. The administrators now winding down the operations, with more than 940 stores and 7 060 staff, have been unable to sell four of Ellerines’s six main brands. Instead they are in talks with two unidentified South African retailers, with one of them prepared to take over leases on 210 stores and the other negotiating for 217 leases.
“We have already taken some that they closed – Shoprite has taken about 10 so far,” said Aubrey Karp, the managing director of Shoprite’s furniture unit, said yesterday.
Brothers Sidney and Eric Ellerines started the furniture company in Johannesburg in 1969 and it grew to be among the country’s biggest retailers.
African Bank, which bought Ellerines in 2008 to boost its lending operations, loaned too much money to people who could not afford to pay it back and the lender collapsed in August as losses mounted.
Ellerines’s funding was cut and administrators stepped in to salvage some stores for creditors.
Shoprite will lease further space “if this becomes available through the landlords or even through Ellerines”, Karp said, without confirming whether his company is one of the two retailers prepared to take over more than 200 Ellerines stores.
“We will also look at all opportunities that arise.”
Shoprite shares 1.42 percent up at R169.
Shoprite said in April it planned to double its number of
closed furniture stores over the next decade as it identifies new markets away from major urban centres.
Many of Ellerines’s stores are in smaller towns such as Fochville in Gauteng, Hluhluwe in KwaZulu-Natal and Kakamas in the Northern Cape.
Handing over the leases would mitigate the damage for landlords and provide jobs for some Ellerines employees, said Les Matuson, one of the company’s administrators, in an interview. – Bloomberg
Shoprite’s shares rose after the retailer said it would take over the leases of some of the closed Ellerines’ shops.