Edcon to retrench 22,000 employees
SA’s biggest non-food retailer, Edcon, has served 22,000 of its employees with notices of retrenchment, blaming loadshedding and the initial 45-day hard lockdown for its collapse.
The Edcon Group, which owns Edgars and Jet, is in business rescue and seeking buyers to avoid liquidation as it struggles to stay afloat due to debt and poor sales.
On Thursday last week, Edcon’s 22,000 workers were served with retrenchment notices by its business rescue practitioners, as the 90-year old company tries to avoid being liquidated.
“The company’s financial position has recently become distressed due to the following: poor sales ... the recession in the South African economy, exacerbated by frequent load-shedding which disrupted purchasing patterns,” the retrenchment notice, dated June 10, said.
It said Edcon was also hit by “the advent of the Covid-19 pandemic which resulted in the government announcing and implementing measures, including the initial 45-day hard lockdown period which prohibited trading of non-essential products”.
The notice was addressed to all employees and the SA Commercial, Catering and Allied
Workers Union (Saccawu).
An employee, who asked not to be named, said she was sending out her CV in the hope of finding another job.
“I’m very scared, I’m in fear because I don’t really understand what’s really happening but it’s clear that our jobs are on the line.”
A business rescue plan devised by Piers Marsden and Lance Schapiro was completed last week and shared with staff and creditors.
Edcon was placed into business rescue in April despite a R2.7bn bailout by the Public Investment Corporation, landlords and creditors in December 2018.
The rescue practitioners said last week that “a significant number of parties expressed interest” in purchasing Edgars or Jet, or both brands.
Saccawu’s secretariat co-ordinator, Lucas Ramatlhodi, said the union believed the decision to put Edcon in business rescue was “very premature”.
“The company had received a cash injection in the form of a bailout [from the PIC] in the very recent past.
“We still haven’t received feedback in terms of how the bailout had assisted in terms of turning the company around.”
He said the union had raised these concerns with trade, industry and competition minister Ebrahim Patel.
Schapiro said: As at today no binding offers have been received and therefore we cannot predict which parts of Edcon will be successfully sold.
“Therefore, it is prudent to start consultations with all employees in terms of section 189 and then, should an offer be received, accepted and implemented, those affected employees would be transferred to the new owners.”
He said the intention was to sell the entire business.
“This would result in a significant number of jobs being saved. A sale of parts of the business will result in job losses. ”—