Among other initiatives, the group rationalised its brand portfolio and management team, while cutting expenses as part of an effort to strengthen its balance sheet.
CEO Toni Fourie said the restructuring had come at the right time, when consumer spending was being stifled by high interest rates and rising food prices, which was worsened when the economy sank into its first recession in 17 years.
“As a group, the best news right now is that the restructuring process is almost over,” Fourie said in an interview. “We are moving from a phase of reduce, consolidate and restructure ... into a new phase of stabilise, grow and build.”
Ellerine Holdings is the parent company of established retail furniture brands like Ellerines, Beares, Geen & Richards, Furniture City, Wetherlys and Dial-a-Bed.
Fourie said the group had managed to lower its cost base and was now well placed for growth.
The group started restructuring in January last year, reducing its brands to six from 13 and cutting its management teams to allow for greater efficiency within the group.
Fourie said the old 13 brands were fragmented and diluted, so the group felt it was time to refocus and build six differentiated and dominating brands. This exercise translated to a reduction of the management team as well.
“We have got a substantially lower cost base in the company now,” said Fourie.
Ellerine closed at least 160 stores during the course of the restructuring process and also sold Rainbow Loans and Early Bird, which were considered to be noncore businesses.
The businesses of Furncity, Town Talk and Savells Fairdeal were consolidated, resulting in Ellerines now having a total of 650 stores.
Lubners was consolidated into Beares, while all the group's mattress businesses are now trading under the Dial-a-Bed brand.
Fourie said the group had developed a store for all its six brands with a new look and new feel. This would allow them to better penetrate the markets they catered for.
The group operates more than 1100 retail furniture stores in SA and neighbouring countries.
During the restructuring phase Ellerine moved its financial services to African Bank. Fourie said this was to allow for the retail part of the business to focus on being a retail specialist.
He said as a result of that transaction, the group would be able to grow its client base since the cost of credit has decreased.
However, Fourie said this would not necessarily result in excellent trading for the group during the festive season as the situation continued to be tough.
“It is going to be a tough Christmas but we are reasonably confident that we are going to do okay,” he said.
Ellerine plans to spend R120m in the year ahead on opening new stores.
“We now are in a forward momentum,” said Fourie.
Ellerine Holdings was listed on the JSE for 37 years as a separate entity until last year, when it ceased to be listed after African Bank bought the group for a reported R9,85bn.
Source: Business Day
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