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Edcon, the country’s biggest clothing retailer, has said it has no plans to pay back the millions of rands in fees it allegedly illegally charged its club card members since 2007.
Edcon’s outgoing chief executive Bernie Brooks said this during the company’s financial results announcement this week that the company had no plans of paying back the thousands of customers who are part of their club membership scheme.
“If you think about sanctions such as paying back the money, the net value for the customer has been greater than the money that’s been paid so potentially we have no plans to pay back the money,” Brookes said, adding that the company does not foresee itself losing the appeal.
Brookes said the company was confident it would win the appeal challenge because it did nothing wrong.
“It’s a product that we sell like any other product in the store. The customer agrees to buy the product, it then goes into their credit account so they can pay it off every month,” he said.
Brookes said there has not been a significant decline in its club membership ever since the National Consumer Tribunal announced its findings earlier this month.
The company also announced that Brookes’ contract has been extended and former Massmart chief executive Grant Pattison, who has been a non-executive director of the company for three months, would be taking over from him (Brookes) at the end of January.
Brookes, an Australian, said he was excited that a South African would finally lead the company after the position was held by a number of foreigners, including himself. The company said the contract is “similar to the terms of a contract of a chief executive who assumes a position of a similar size company” when asked of the duration of Pattison’s contract.
The company said Pattison would be tasked with revamping CNA, including eliminating its digital sales and toys departments as it was currently dabbling in too many categories instead of focusing on its core business of stationery supplies.
The group has also opened two trial stores and an amount of R100 million would be spent to revamp and relaunch CNA.
Brookes was brought in when the group’s fortunes took a nosedive two years ago and the company changed hands from Bain Capital to creditors and a number of shareholders.
Brookes also announced that the company had managed to consolidate a number of its stores and, in the process, close down 120 stores in the last financial year.
The company now has 1343 stores, including 187 outside the country.
The company has also cut down on suppliers, including slashing the number of suppliers in Shanghai by up to 30%, and currently has about 800 suppliers. Quotas initially meant for other suppliers were reallocated to the remaining ones instead of falling away.
Local sourcing, Brookes said, increased from 18% two years ago when he was brought in, to the current 53% despite an overall 20% decrease of the number of suppliers.
“We were over indexing on the number of suppliers,” he added.
According to Brookes, the company has already started work on redeveloping its entire Information Technology systems at a cost of R1.4 billion.
Brookes said the company still has large stores in CBDs across the country, even when a lot of stores where moving away from such areas, so it would continue consolidating but there would not be any “dramatic closures” as cross-shop rebranding would also be considered.
