South African fashion retailer Edcon announced on Wednesday that its board had passed a resolution authorising it to file for business rescue in the next few days.
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 this year, it said it had secured R2.7 billion rand 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 that 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, meaning it would be unable to pay its suppliers for both the March and April month-ends.
Paying April salaries would also require assistance from the Unemployment Insurance Fund.
Edcon CEO Grant Pattison said Edcon stores were set to reopen on Friday but will have to do so under business rescue.
