Fewer than 60 CNA stores to remain as business rescue practitioners push envelope

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CNA business rescue practitioners envisage 55 to 60 stores to remain open.
CNA business rescue practitioners envisage 55 to 60 stores to remain open.
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  • CNA business rescue practitioners met with disgruntled landlords on Friday.
  • Some say they have not been paid since the business rescue process started. 
  • The business rescue practitioners aim to reduce CNA's footprint to 60 or even fewer stores. 

Newly appointed CNA business rescue practitioners met with landlords on Friday and said they would be streamlining the store's footprint, with only 55 to 60 stores to remain.

"It might happen that it becomes less, but we hope not," said Stefan Steyn, senior business rescue practitioner from Business Rescue Partner.

"We have a strategy to make CNA smaller," said Steyn.

Further, he explained that they had decided to close loss-making shops that had in excess of 20% negative net profit.

CNA currently had a footprint of 163 stores in South Africa, Namibia, Botswana, Lesotho and Eswatini. 

Fifty-two stores were closed as of 16 August, including foreign stores. A further 30 stores would be closed, and landlords would be notified which stores would be closed by close of business on Friday or over the weekend, at the latest.

Steyn said Gauteng, Cape Town and Durban would be the retracted CNA focus points, and they envisaged 55 to 60 stores to stay open.

However, more critical for Steyn was how quickly the head office cost could be cut because if it took a while, then CNA would continue to subsidise a loss-making store.

"We started with choosing only stores with a 10% negative net profit, and we saw that the number of stores that we pull would not be enough to sustain a head office," said Steyn.

The disgruntled landlords said since the business rescue process commenced, most have received zero payments.

"Your predecessor [previous BRPs] undertook to pay 50% of rental. We need to know what will be done as far as the rental and the utilities for that period. Particularly in respect to fixed costs such as rates and taxes, operating costs and electricity consumed," said one of the landlords in the Zoom meeting.

CNA was placed into business rescue in June after the management team had fallen out with former CEO and minority shareholder Benjamin Trisk.  

For Steyn, "the communication with landlords has not been that well, but unfortunately, we were dealt the cards we were dealt, and now we have to answer the landlords so we can all find a common goal".

The questions the landlords have been asking are: which stores will be closed; when will the stores be closed and how will the stores be closed; which shops will be kept open; and what is the offer, said Steyn.

The leading business rescue practitioner said the selection was based on the criteria of profitability and location. Each landlord would get one document that would contain which stores would be closed and a rental offer for those that would remain open.

"Landlords with proven new tenants will be treated as priority one, and where they have already lined up a tenant, we want them to be set up before Christmas. In the next six to eight weeks, we need to be out there, wherever that is, to allow them [new tenants] to move in.

"However, we have constraints, and we have limited resources to close such a large number of shops. Currently, our capacity is to close one shop every two days. Unfortunately, we have no funds to white box. Stores where landlords have tenants, the BRPs, will accommodate closure dates," said Steyn.

Steyn appealed to the landlords to consider the proposal that would be sent and asked for one week for landlords to consider the proposal and give an answer by 30 August.

"We are starting to develop an investment proposal to recapitalise the business and that we want to send out on 14 September. We have some parties we would like to propose to.

"After we have consolidated the business, there are a couple of options and concepts that we want to re-engineer and pilot in three new stores and see if it works. It will make a big difference to the future of the business, and if it is successful, we will roll it out to all existing stores," said Steyn.

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