Another South African store goes into liquidation
South African online retailer Snatcher has entered voluntary liquidation.
Snatcher, officially known as DHD Investments T/A Snatcher Deals, was an online retailer that had operated in South Africa for eight years, selling low-cost and off-brand electronics from China.
It had an annual turnover of around R25 million.
The group confirmed to MyBroadband on Thursday (12 September) that it entered liquidation at the end of August following a series of setbacks.
These included the arrival of cheaper online retailers like Shein and Temu, which disrupted operations and outpriced Snatcher in the market, as well as a more than 100% increase in the cost of customer acquisition through Google.
However, the ultimate end of the business came after management discovered that staff were stealing from the business and engaged in fraudulent activity.
According to MyBroadband, this involved certain staff abusing a voucher system to gain store credit instead of refunds. This exacerbated the group’s financial difficulties and undermined operations.
The business has now been handed over to liquidators to handle the winding up process and auction off remaining assets to pay creditors.
Latest in line
Snatcher is just the latest in a long line of businesses in South Africa that are in financial straits, having entered business rescue and facing the threat of liquidation.
Other known South African brands have already been liquidated—such as Ellies.
Ellies entered business rescue after failing to acquire bank financing to purchase Bundu power. The group went into final liquidation in July.
Business rescue practitioners said that the group faced no reasonable chance of being rescued. However, the Ellies brand will live on under SMD Technologies.
AutoZone, West Pack Lifestyle, PetZone and Hohm Energy, have also been placed under business rescue over the last several months.
Autozone is the largest privately owned automotive parts retailer and wholesaler in South Africa. In 2014, it entered business rescue after its performance did not meet expectations following a private equity transaction funded by debt.
Due to growing debt service obligations, it needed to move cash from operations to meet debt servicing costs. By 2021, it had fallen into a cycle of negative operating leverage.
However, given its strong national brand, the company believes it will recover.
West Pack also believes that it will succeed in restructuring its business.
The group entered business rescue in May as it was financially distressed and unlikely to pay its debts when they became due over the next six months.
One of its business rescue initiatives involves exploring offers to acquire some of West Pack’s assets or the whole business. It also plans to sell non-core assets to improve its financial position.
Petzone was also placed under business rescue in May, similar to its holding company WestPack, due to its inability to pay debts when they are due amid its financial distress.
Non-performing stores have already been closed, and discussions and processes to sell non-core assets have started.
Solar company Hohm Energy also entered business rescue and ceased trading at the start of August. The company entered business rescue amid cash flow challenges and the inability to service existing debts.
Read: SPAR could save the day for major retailer in business rescue