Edcon still struggling to grow market share

The company‚ which also owns CNA‚ Red Square and Boardmans‚ made a loss of R592m in the three months to 29 September‚ from a loss of R1.18bn a year earlier.

Jürgen Schreiber‚ CEO of Edcon‚ said the quarter under review was a challenging one.

"But we are on the right track‚ which is the important thing. There's still a way for us to go; it's not a fixing from one corner to another‚" he said.

Revenue was at R5.8bn from R5.7bn in the same quarter last year. Trading profit slipped to R139m from R194m.

Simon Anderssen‚ equity analyst at Kagiso Asset Management‚ said Edcon's 2.4% year-on-year retail sales increase in the second quarter‚ showed that the group continued to lose market share to its listed competitors.

"Same-store sales growth of 0.8% highlights that the group is not yet seeing meaningful benefits from its strategic interventions‚" he said.

Local players such as Truworths‚ Woolworths and The Foschini Group have streamlined their fashion supply chain in the face of heightened competition as global players such as Zara and others expand in SA.

Edcon's Edgars division grew total retail sales by 4.9%‚ but on a like-for-like basis there was a 2.4% reduction in retail sales.

"We took a pretty tough stance on the winter markdowns. We really wanted to go for a good hard clearance strategy‚" Schreiber said.

The company is pushing hard to fix its Edgars business by revamping stores‚ and beefing up its merchandising as it turns its attention to "quick response" modern fashion. It is also adding more international brands to attract footfall.

The company entered into a partnership with local group The House of Busby and Britain's Arcadia Group to bring Topshop‚ known for its cheap‚ chic apparel to SA.

Edcon's discount division‚ which includes Jet and Legit‚ grew same store retail sales by 4.9%.

Abri du Plessis‚ CEO and chief analyst at Gryphon Asset Management‚ described Edcon's results as "disappointing".

"They're struggling to get it right. They have a huge debt load but that should not be affecting the way they're trading‚" he said.

Edcon‚ which was once known as the retail jewel of SA‚ has significantly underperformed its peers since its highly leveraged private equity buyout in 2007 by Bain Capital.

Five years on‚ the company is still saddled with debt: as at September 29‚ its debt was at R23.4bn‚ compared with R24.5bn on March 31.

It is expected that the R10bn injected since Absa took over Edcon's store card book in June will allow it to reduce debt.