{"id":782902,"date":"2024-07-17T10:30:00","date_gmt":"2024-07-17T08:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=782902"},"modified":"2024-07-17T10:12:34","modified_gmt":"2024-07-17T08:12:34","slug":"three-big-south-african-shopping-brands-in-deep-trouble","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/782902\/three-big-south-african-shopping-brands-in-deep-trouble\/","title":{"rendered":"Three big South African shopping brands in deep trouble"},"content":{"rendered":"\n

Three big South African retailers, Petzone, AutoZone, and West Pack, are in business rescue and face an uncertain future.<\/p>\n\n\n\n

This month, many South African car lovers were surprised to learn that AutoZone entered business rescue proceedings after landing in financial trouble.<\/p>\n\n\n\n

AutoZone is one of South Africa\u2019s top automotive parts retailers and wholesalers, with over 200 shops nationwide.<\/p>\n\n\n\n

The AutoZone business rescue announcement followed news that Petzone and West Pack were in financial distress and entered business rescue.<\/p>\n\n\n\n

Petzone and West Pack have already started closing distressed shops as part of the business rescue proceedings.<\/p>\n\n\n\n

These closures were quick, upsetting many shoppers who loved and trusted these retail brands for their products.<\/p>\n\n\n\n

Bela-Bela residents, for example, expressed unhappiness when the West Pack and Petzone stores in Bela Mall shut down unexpectedly.<\/p>\n\n\n\n

Although Petzone, AutoZone, and West Pack are the most recent announcements, they are not the only well-known businesses which have fallen on hard times.<\/p>\n\n\n\n

Pick n Pay, one of South Africa\u2019s largest and best-known retailers, has become technically insolvent and is raising capital to stay afloat.<\/p>\n\n\n\n

The retailer has launched a rights offer to raise R4 billion from existing shareholders and will list Boxer separately on the JSE.<\/p>\n\n\n\n

The Boxer initial public offering (IPO), which is set for later in the year, is expected to raise between R6 billion and R8 billion.<\/p>\n\n\n\n

Pick n Pay CEO Sean Summers has also revealed that 112 Pick n Pay stores will be closed or converted to Boxer franchised stores.<\/p>\n\n\n\n

These interventions are needed to strengthen Pick n Pay\u2019s balance sheet by reducing its unsustainable debt burden.<\/p>\n\n\n\n

Another strong South African brand, Ellies, entered business rescue proceedings in January 2024.<\/p>\n\n\n\n

Its financial situation was so dire that its business rescue practitioner said the company could not be saved, and they placed it into liquidation.<\/p>\n\n\n\n

Some consolation is that SMD Technologies announced that it had acquired the Ellies electrical brand and intellectual property.<\/p>\n\n\n\n

SMD said the sale of the Ellies electrical brand would ensure that the trusted name remains available to its loyal customers.<\/p>\n\n\n\n

SMD Technologies highlighted that it only acquired the Ellies brand and intellectual property, not the operating units.<\/p>\n\n\n\n

Most of these companies blamed the challenging South African business environment for their struggles.<\/p>\n\n\n\n

They highlighted that poor economic growth, load-shedding, high interest rates, and high unemployment hurt their businesses.<\/p>\n\n\n\n

However, some, like West Pack, admitted that poor business decisions and taking on too much debt also played a role.<\/p>\n\n\n\n

The sections below provide an overview of the companies currently in business rescue and what to expect.<\/p>\n\n\n\n

\n\n\n\n

West Pack<\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

In May 2024, West Pack Lifestyle entered voluntary business rescue proceedings. It includes West Pack Lifestyle, West Pack Lifestyle Distribution Centre, and West Pack Franchise.<\/p>\n\n\n\n

Other retail brands affected by the business rescue process are Caf\u00e9 Estreito, Caf\u00e9 Estreito Franchise, and Beija Flor Investments.<\/p>\n\n\n\n

The company was financially distressed and was unlikely to pay its debts when they became due over the next six months.<\/p>\n\n\n\n

West Pack said there was a reasonable prospect of the company being saved and is executing initiatives to restructure the business and drive its turnaround.<\/p>\n\n\n\n

These initiatives include exploring offers to acquire some of West Pack\u2019s assets or the full business.<\/p>\n\n\n\n

It also considers a corporate finance transaction and selling non-core assets to improve its financial position.<\/p>\n\n\n\n

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Petzone<\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

On 15 May 2024, Petzone and Petzone Franchise were placed under business rescue. Petzone has 21 stores and employs 104 staff members. Petzone Franchise has 34 stores.<\/p>\n\n\n\n

Like its holding company, West Pack, Petzone is in financial distress and will not be able to pay its debt when it is due.<\/p>\n\n\n\n

They have already closed non-performing stores and started discussions and processes to sell non-core assets.<\/p>\n\n\n\n

The business rescue plan, which was set to be published on 24 June, has been delayed until 30 August.<\/p>\n\n\n\n

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AutoZone<\/strong><\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

AutoZone is the largest privately owned automotive parts retailer and wholesaler in Southern Africa with a presence in South Africa, Namibia, Swaziland, and Botswana<\/p>\n\n\n\n

The company has 214 wholly-owned retail branches and 33 member-owned franchise branches.<\/p>\n\n\n\n

AutoZone said its financial distress dates back to 2014, following a private equity transaction funded by debt.<\/p>\n\n\n\n

AutoZone\u2019s performance did not meet expectations, and it faced increasingly burdensome debt service obligations.<\/p>\n\n\n\n

It was forced to divert cash from operations to meet funding needs, and by 2021, it had fallen into a cycle of negative operating leverage.<\/p>\n\n\n\n

The company is confident it can recover, given its strong national brand and branded products in South Africa.<\/p>\n\n\n\n

\n\n\n\n

Read: Two massive companies call it quits on the JSE<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Three big South African retailers, Petzone, AutoZone, and West Pack, are in business rescue and face an uncertain future.<\/p>\n","protected":false},"author":10,"featured_media":782908,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[20181,557,20220,4067,20130],"class_list":["post-782902","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-autozone","tag-ellies","tag-petzone","tag-pick-n-pay","tag-west-pack"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782902","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=782902"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782902\/revisions"}],"predecessor-version":[{"id":782912,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/782902\/revisions\/782912"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/782908"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=782902"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=782902"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=782902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}