African Bank buys, delists Ellerines

Furniture group Ellerine Holdings, which will no longer be listed as a separate entity from today, aimed to be leaner, meaner and more focused by the time the festive shopping season starts.

The furniture retailer disappears from the JSE after 37 years.

Ellerines, founded in 1950 by Ellerine brothers Sidney and Eric, was bought by African Bank for R9,85bn in a move that had been hailed as revolutionary by the market.

David Woollam, executive director of African Bank, said the lender would spend the next three to six months analysing the company in detail before making any changes.

However, changes on the drawing board include moving the company back to basics, with a focus on selling furniture, not credit.

Woollam said this would involve streamlining brands down from 13. Ellerines has more than 1000 outlets with brand names including Town Talk, FurnCity, Beares, Geen & Richards, Lubners and Dial-a-Bed, Mattress Factory, and Furniture City.

It also owns Wetherlys and Osiers. Woollam said these multiple brands were often serving the same market.

African Bank aims to boost the retailer's competitiveness by enabling it to offer cheaper credit and boost its own client base through cross selling.

The bank's plan to change the face of the furniture retail industry might not have happened at all if a proposed merger between Ellerines and rival JD Group had been allowed by the Competition Tribunal.

In August 2000, the tribunal said it had prohibited the transaction between JD Group and Ellerines Holdings because it found a merger was “likely to substantially lessen competition”.

Woollam said if present interest rates were retained at the end of this month, a consumer turnaround was likely towards year-end. If rates moved up again, but then peaked, the turnaround would be pushed over into next year.

The merged entity aimed to be ready to benefit from an upswing, with an enhanced selection of credit offerings — a far cry from when Eric Ellerine entered the furniture business in 1950, opening his first shop in Cyrildene and, according to legend, making his first sale on credit.

Source: BusinessDay

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