Edcon, the largest non-food retailer in South Africa which owns Edgars, Jet and CNA, has been struggling in recent years, mainly due to competition from cheap foreign imports and a move by consumers to e-commerce.

In March 2019 it said it had secured R2.7 billion in new cash and rent deductions as part of a recapitalisation plan, raising hopes that thousands of jobs would be saved.

On Wednesday, however, Edcon said following the outbreak of Covid-19 in South Africa and the imposition of a nationwide lockdown to curb its spread, the group had lost R2 billion in sales.

"The sales miss and the decline in collections of the debtor’s book has meant that Edcon is unable to pay its suppliers for both the March and April month-ends," it said in a statement posted on its website.

Paying April salaries would require assistance from the Unemployment Insurance Fund (UIF) Covid-19 programme targeted at employees whose companies have been forced to halt operations during the lockdown.

"Edcon also anticipates that the sales will be depressed for some time during the “Covid-19 Risk-Adjusted Strategy” phase, which may last several months," the company added.

CEO Grant Pattison said Edcon stores would reopen on May 1, when the government relaxed current lockdown regulations.

"But we will have to do so under business rescue," Pattison added, saying the decision had been made in the best interest of the company and all stakeholders as it was unable to raise the funds needed to pay creditors.

"In this circumstance, South African law requires that the company either be placed in liquidation or business rescue. To provide us with a longer period to raise the money, the board has taken a decision to file for business rescue," said Edcon.

Pattison said he hoped that some version of the business would emerge afterwards.

Edcon, which has been in existence for 90 years, operates its business under four principal divisions throughout Southern Africa.

African News Agency (ANA)