Yet another popular South African retailer to be liquidated

Sports retailer Frame Leisure Trading—which operates The Cross Trainer—is likely to be liquidated following an unsuccessful business rescue process, Moneyweb reports.

The group entered business rescue on Wednesday, 14 August.

The sports retailer has faced cash-flow problems from the Covid-19 pandemic and has struggled to keep up with operational costs. It was also heavily impacted by the July 2021 unrest, with the compensation from Sasria not enough to cover its losses.

According to Moneyweb, the business rescue practitioners (BRPs), George Nell and Gideon Slabbert, told all affected parties that there was no reasonable prospect of its rescue and an urgent liquidation application has been made to the High Court.

This came about because the group did not receive the required financial support for the company and post-commencement financing, several leases were cancelled, and employees’ salaries were not paid in full for September.

Closing shop

Frame Leisure Trading will thus join the 1,000 companies that went into liquidation in South Africa in 2024.

Cross Trainer’s competitor, Drip Footwear, also recently entered liquidation, with its employees let go earlier this month.

Drip Footwear was established in 2019 and sold its line of sneakers across various retail centres nationwide.

The company could not pay R20 million for advertising services, so the High Court in Johannesburg ordered that it be liquidated at the beginning of September. The order affected 14 stores in popular malls across the country.

Lumia Technologies, the e-commerce retailer that operates the popular online retailer Zando, also said it is closing up shop in South Africa by the end of 2024 to focus on its other markets.

The group is aggressively cutting costs to turn profitable, including reducing headcount, exiting everyday grocery items and food delivery, and cutting delivery services unrelated to its e-commerce business.

Zando.co.za was founded in 2012, but the highly competitive market has made operations incredibly difficult.

In addition to these recent cases, a host of other businesses have also tread the same path.

Solar company Hohm Energy and JSE-listed Ellies Holdings started liquidation proceedings after their respective business rescue proceedings could not save the companies.

Other popular retailers in the country are also in trouble and are at risk of liquidation, but at least their chances appear to be better.

Retailer West Pack entered business rescue in May as it was financially distressed and unlikely to pay its debts when they became due.

However, reports suggest that SPAR could acquire the group, giving it a lifeline.

Similarly, AutoZone, the largest privately owned automotive parts retailer and wholesaler, is also reportedly being eyed by JSE-listed investment group Metair, which could spend R290 million to acquire the group.

Autozone entered business rescue in July after performance did not meet expectations following a private equity transaction funded by debt.

It remains to be seen if Yeast City Housing, a Tshwane-based non-profit social housing company, will be saved after entering business rescue due to struggles in servicing a debt of R130 million, including interest.

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