- 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.
- Many restaurants and bars have permanently closed their doors.
- For more articles, go to www.BusinessInsider.co.za
The coronavirus pandemic has caused misery in thousands of businesses in South Africa. Already, many have had to close their doors amid the turmoil.
Others have filed for bankruptcy protection, and may yet recover.
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.
According to a new deal, Retailability, which owns the Legit chain of stores, will buy the most profitable Edgars stores - the rest will be closed. An announcement of a similar agreement for Jet is expected within a week.
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.
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.
Media24 has closed a number of print publications, and restructured others as the pandemic wreaked havoc on advertising income.
“Even with a return to pre-Covid-19 economic levels, the impact of the pandemic on our print media operations will be unrecoverable. Sadly, we have no choice but to restructure our business now to curtail the losses in our print portfolio and allow us to focus on keeping the retained titles sustainable and in print for as long as possible,” says Ishmet Davidson, CEO of Media24.
The newspapers Sunday Sun and Son op Sondag will be closed, as well as the Eastern Cape edition of Son. The physical editions of Volksblad and Die Burger Oos-Kaap will disappear, and they will be published as weekday digital editions only. Four community newspapers in KwaZulu-Natal (Amanzimtoti Fever, East Griqualand Fever, Hillcrest Fever and Maritzburg Fever) will be closed and six others will be consolidated under three brands. The magazines Move!, as well as Men’s Health, Women’s Health, Bicycling, Runner’s World will be closed.
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.
Restaurants and bars
While sit-down meals are now allowed in restaurants after a months-long ban, alcohol sales with meals still out of bounds, starving many restaurants of much-needed income.
Many restaurants and bars did not have the financial resources to survive the long lockdown.
Wendy Alberts, CEO of the Restaurant Association of South Africa (RASA), told Business Insider that “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.
Popular Melville restaurant Pablo Eggs Go Bar has also announced that it has closed down. "It’s been a wonderful four years on that magical corner but in these uncertain times we have decided to consolidate our financial exposure and we simply lack the financial needs to reopen," its owners said in an Instagram post.
The Myoga restaurant, launched in 2007 in the grounds of The Vineyard hotel in Cape Town, has also closed. “Having weathered two recessions, a water crisis and now Covid-19, it is time to close Myoga’s doors and look to the future,” says owner Mike Bassett. “The way we live, including the experience of eating beautiful food, together, is forever changed. We need to make sure that where we can affect it, that change is for the better.”
Flight Centre's Cruiseabout
Flight Centre, South Africa’s largest travel company, will close 40% of its stores and shut its cruising holiday Cruiseabout brand, with its customers and bookings to be transferred to the rest of the business.
Hout Bay's Mariner's Wharf
The harbourfront centre, which opened in 1984 and houses several shops and restaurants, "has taken the extremely difficult decision to cease trading until the economy recovers". Employees have been retrenched.
Bishop Bavin school
The prestigious private Bedfordview school has shut its doors, allegedly due to a financial crisis, News24 reported. According to a Gauteng Department of Education spokesperson, many independent schools are experiencing financial difficulties as some parents are not paying fees as expected amid the lockdown, and widespread loss of jobs.
The Gadget Shop
The company, which sold a wide range of "gifts, gadgets, gizmos or items of wonder" online and from 11 stores, closed down last month.
The online tech hardware retailer has also closed its doors. The Johannesburg-based company was founded in 2008. "Unfortunately, due to the Covid-19 situation and its subsequent challenges, the cards that were dealt were too much for Rebel Tech to overcome," the company said.
Receive a daily update on your cellphone with all our latest news: click here.
Get the best of our site emailed to you daily: click here.
Also from Business Insider South Africa:
- Gold is rocketing - and there are many ways to invest. But some experts are not biting
- Cleaning company admits to Sassa price fixing, top businesswoman named
- A Cape Town drive-in concept sold hundreds of non-refundable tickets, but is still not open
- Some SA celebs will send you a personalised video for R150 - but Siya Kolisi, Kurt Darren are pricier
- You can now deposit cash directly into your bank account at any Pick n Pay till
- Curro schools couldn’t play sport during lockdown, so they began competitive Minecraft