These SA businesses may not have survived lockdown
- The coronavirus crisis may have dealt the final blow to some of SA's best-known companies.
- Several filed for bankruptcy protection during lockdown, including Edcon, Comair and Phumelela Gaming & Leisure.
- Some of them may yet survive, but up to 1.8 million people may lose their jobs amid the catastrophe.
- For more articles, go to www.BusinessInsider.co.za
The South African economy looks set to emerge from the coronavirus crisis with up to 1.8 million fewer jobs – as thousands of businesses are not expected to survive the turmoil.
Among them may be some well-known names, which have been around for decades:
Clothing retailers across the world have had a torrid time. Discretionary spending on clothing has tanked amid large-scale layoffs, and consumers - stuck in sweatpants and pyjamas during lockdown - are also not in the market for big-ticket wardrobe items. In the US, large store chains like J. Crew, Neiman Marcus and JC Penney have filed for bankruptcy over recent weeks.
The massively indebted Edcon, owner of Edgars and Jet, was in a battle for survival even before the coronavirus crisis. But the national lockdown, which initially banned clothing sales, may have dealt the company a lethal blow.
In a teary presentation in March, CEO Grant Pattison told suppliers that Edcon can’t settle its bills – and that it may not be possible for the company to re-open after the lockdown. Soon after, Edcon filed for bankruptcy.
There was some hope that Mr Price could be interested in buying (at least) Jet, but the retailer denied this speculation.
Edcon’s future now looks extremely uncertain as it has already benefited from a R2.7 billion lifeline extended by the Public Investment Corporation, landlords and banks last year. Its backers probably won’t be keen to offer more, and in the absence of a buyer, this could mean the end of a company whose first store opened in 1929 in Johannesburg.
The owner of kulula.com (and local operator of British Airways in SA) also filed for bankruptcy protection during lockdown. Across the world, other airlines found themselves in the same position, including Flybe (UK), Trans States Airlines and Compass Airlines (US), Virgin Australia as well as Avianca in Colombia. SAA has been in business rescue since December.
This week, Comair’s business rescue practitioners warned that the airline requires a “substantial” cash injection and that it can only survive if it sells half its planes. Under the most enthusiastic scenario, it won’t take to the skies before November.
The magazine industry has been one of the hardest hit during the pandemic. Amid huge economic turmoil, advertising has dried up, and in South Africa, some stores were not selling magazines during the lockdown.
Associated Media Publishing, which published Cosmopolitan, House & Leisure, Good Housekeeping and Women on Wheels, shut down last month, blaming the "devastating" impact of Covid-19. The company was launched in 1982 by magazine doyenne Jane Raphaely.
More magazine casualties could include titles like Bona, Country Life, Essentials, Food & Home, Garden & Home, People, Rooi Rose, Vrouekeur, Woman & Home and Your Family after their publisher Caxton and CTP Publishers & Printers announced that it is “withdrawing” from magazine publishing. Buyers for these titles are sought – failing which, they will be closed.
Phumelela Gaming & Leisure
Founded in 1997 and based at the Turffontein racecourse in Johannesburg, the company is SA’s biggest horse racing business. It operates four racecourses, more than 200 tote outlets and online sites, as well as a telephone-betting centre. It also owns Betting World, which has nearly 70 retail outlets and an online platform.
It filed for business rescue during lockdown, but thanks to R100 million in emergency funding from the Oppenheimer family, it may still be stabilised.
Pretoria Society of Advocates
Commonly known as the Pretoria Bar, the lockdown has worsened its financial situation. It is owed millions by its members, and may apply for liquidation.
Prada in South Africa
The Italian luxury group Prada shut its only store in South Africa during lockdown. The Sandton City store – covering an area of 800 square metres and designed by architect Roberto Baciocchi - opened its doors five years ago.
The courier company – which is part of The Laser Group – is no longer operational after the lockdown brought its business to a halt.
Even as the rest of the country moved into Level 3 on Monday, sit-down meals in restaurants are still out of bounds, adding to the income and job losses in an industry that employs 800,000 people. According to Wendy Alberts, CEO of the Restaurant Association of South Africa (RASA), “dozens of restaurants” are going out of business every day.
Among the most prominent is The Kitchen in Cape Town, where former US first lady Michelle Obama famously had lunch in 2013. Launched in 2009 by chef Karen Dudley, it announced last week that it would close its doors.
The popular Kalk Bay Theatre & Restaurant also did not survive lockdown.
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