Bernie Brookes and Edcon – one-year scorecard

BernieBrookes2It is probably timely to review the performance of Bernie Brookes since he was appointed head of Edcon, a large retail group in South Africa, on September 30, 2015, almost a year ago to the day.

Around that time, I wrote a column on Edcon’s appointment of Brookes that summed up with four points:

  • An ailing South African retailer (Edcon).
  • A CEO at that retailer being sent to the knackers yard long before his contract ended (CEO – Jurgen Schreiber).
  • An Australian CEO being given his freedom to explore other opportunities after creating a “mess” at Myer. (Bernie Brookes).
  • The ailing South African retailer hires the Australian CEO! (Edcon hires Brookes).

Some say that Edcon is almost bankrupt. For example, the following appeared in Biznews on April 18 of this year: “Edcon stops servicing its $950m debt in desperate bid to avoid bankruptcy”.

There has been a mad scramble before and after this announcement to refinance debt and save the company and thousands of jobs. (The group successfully reached an agreement with all of its bank lenders to extend the maturity of over R7.9 billion of bank debt in November last year).

So let us have a look at the latest results for the 52 weeks ended March 26, 2016 and for the 13 weeks ended June 25, 2016. The full results can be found here. Fair warning – it may disturb some readers. It is littered with every known reason why business could get even worse for Edcon.

Incidentally, on September 20 (Tuesday of this week), the company announced that, “Edcon has taken a decision to postpone the bondholder call originally scheduled for tomorrow 21 September 2016”. Reason? One can only wonder.

And now to the results for the 52-week period:

  • Sales (like for like) down 3.2 per cent.
  • GP down 0.5 per cent.
  • EBITDA down by 1.7 per cent.

And for the 13-week period:

  • Sales down 2.0 per cent.
  • GP down 2.0 per cent (massive).
  • EBITDA down by 53.8 per cent (massive).

Of the sales decline of 3.2 per cent for the 52-week period, credit sales declined by a huge 15.2 per cent. This is significant, bearing in mind that credit sales have always been an important factor within several Edcon companies.

How was this decrease allowed to happen?

Add to this some vast restructuring that some may say should have happened much earlier in Brookes’ reign.
No matter how generous one may be, the results are simply appalling and a year down the track have gotten a lot worse. Did Edcon provide Bernie with a return fare to Australia?

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702

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