Johannesburg – Stuttafords stores have finally closed shop, now that a final bidding process has been unsuccessful, chief executive Robert Amoils confirmed to Fin24 by phone.
Two weeks ago Fin24 met with Amoils, right before the final bidding process was to be concluded. At the time there was a glimmer of hope for one of South Africa’s oldest department stores.
If successful, one of the parties was to become the owner of one or both of the last two Stuttafords stores (Eastgate and Sandton), subject to certain conditions, he explained.
Three bids had been received and only two were capable of implementation. One was chosen by the business rescue practitioners as the preferred bid. However on July 30 Liberty, the landlord and asset manager of the two strongest performing stores in the group, informed the business rescue practitioners that it chose to reject the final offer.
The business rescue practitioners will engage with the remaining bidder for Stuttafords International Fashion Company’s intellectual property. This sale is expected to be concluded as soon as possible, according to a report from the practitioners.
“Staff at the stores as well as head office will now be retrenched,” Amoils said. The business rescue practitioners confirmed that the cost of retrenchment will be covered. Amoils previously told Fin24 that the wind-down meant that the group could pay employees their full retrenchment packages. In liquidation this would have been limited.
Media reports have indicated that recruitment company Lulaway is working to have some of the 950 retrenched workers placed in other positions in the retail sector. Amoils said that although he is aware of this, Stuttafords is not working with the recruiter, nor does it have any affiliation or partnership with it.
The wind-down process will now be concluded. Over the coming months following the closure administrative procedures will be finalised, including the collection of the in-house debtors' book which is expected to take six months to conclude, Amoils told Fin24.
The retailer filed for business rescue on October 28 2016 following a downturn in sales and margins in February 2016, Fin24 previously reported. The business had R836m in debt but was determined to avoid liquidation. Prior to the business rescue, Stuttafords had 12 department stores and 16 standalone stores. The current shareholding group managed to reposition the store as a luxury brand, targeting the higher LSM market, he explained.
Fin24 spoke to Amoils in June, when five stores were still operating. He relayed details of the business rescue plan which had been subject to various adoptions and amendments, among these a bidding process for a third party to acquire the whole or parts of the business.
This was unsuccessful and eventually creditors voted in favour of a wind-down after Ellerine Brothers, the default sponsor, pulled out of its commitment to fund the business, Amoils told Fin24.
Creditors voted against the initial business rescue plan in favour of the structure presented by Ellerine Brothers. “If the Ellerines had stuck to it and complied with their obligations set out by their plan as voted in favour by them and a vast majority of the other creditors, then certainly the business could have been saved.”
The combination of a “leanly capitalised” balance sheet and shareholder disagreements filtering into the market meant that suppliers and insurers became “justifiably” worried. “Unfortunately, without the support of creditors and/or shareholders, a business in a challenging environment with a thinly capitalised balance sheet is going to take strain,” said Amoils.
Sections of the Sandton store have been taped off and stock has been regrouped in a separate selling area. Now a shell of its former self, Sandton was the group's best performing store, said chief executive Robert Amoils. (Photo: Yolandi Groenewald)
Since June, the Namibian store has been sold to a third party; Stuttafords still operates in the country but not under the ownership of the group. Both stores in Botswana have been closed and the group is still finalising various claims and employee retrenchments, he explained.
The business practitioners said in their report that the first distribution to concurrent creditors whose claims have been submitted and accepted is expected to made by August 2017. The amount of distribution is still to be determined, as it depends on resolving a claim by Ellerine Brothers. The practitioners are disputing the claim as Ellerines says it holds a preference. The practitioners have also committed and are making payments to secured creditors.
“Once all payments have been made in terms of claims lodged, then the business will be subject to a possible liquidation if a liquidation is requested and/or voted in favour by one or more of the creditors,” said Amoils. He reiterated that this will happen once the business rescue process is concluded.
Amoils said the store has received feedback from consumers who are saddened by its closure. Other complaints relate to returns. “That is something we tried to handle in the most effective way,” he said.
The store has had a number of promotions to maximise sales ahead of the closure. Amoils on Tuesday confirmed that all stock has been sold.
Remaining stock at the Eastgate store is being sold off at promotional prices ahead of closure. (Photo: Lameez Omarjee).
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