Stuttafords announced on Monday it will apply for voluntary business rescue after numerous measures failed to mitigate the effects of the tough economic climate and the impact of customer migration to lower-priced products.
The impact of the prevailing retail climate on the company’s turnovers and stock turns (as from January 2016) has been far more dramatic than could ever have been anticipated, Stuttafords CEO Robert Amoils said in a statement.
He said over the last two years Stuttafords has embarked on an aggressive repositioning, including consolidating stores by eliminating loss-making locations and investing in a narrower, more efficient brand and category assortment that resonates more effectively with the younger black market.
The company has also consolidated head office infrastructures into one centralised location, invested in a comprehensive customer relationship management system and enhanced the visual appeal of its stores.
Another measure was a strategic partnership with RCS, the largest provider of outsourced retail credit programmes in South Africa, to enable a more widely accessible credit offering to its customers.
According to Amoils, business rescue would provide the company with the necessary latitude to responsibly and efficiently streamline its operations and recapitalise its balance sheet.
A business rescue plan, if adopted, will not only minimise stakeholder and supplier losses and uncertainties, but also enable a rapid and effective repositioning of the company’s operations and financial structure, he said.
“While disappointing (and not ideal in terms of timing given the fast-approaching December shopping period), business rescue will, in a very short space of time, provide the company’s balance sheet and operations with the resilience and stability required to build on the infrastructure already in place.
“Should a business rescue plan not be adopted, the worst-case scenario is liquidation.”
Amoils said Stuttafords strongly believes that a business rescue process relative to a liquidation is more appropriate for the company’s stakeholders, including its suppliers and landlords, given the favourable outcome anticipated.
“We are optimistic that the breathing space that business rescue affords will result in the most viable and financially sound outcome for suppliers and employees. South Africans will also continue to enjoy the unique and luxurious shopping experience that has become synonymous with the Stuttafords brand,” said Amoils.
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