Edcon CE's new sortie into Africa

Grant Pattison sold Massmart to the world's largest retailer, Walmart in 2011 and by the following year, the retailer's revenue contribution from the rest of Africa was 21.68%. By 2015, it had declined to 12.6%, and Pattison resigned the same year.

Despite Pattison's seeming inablity to launch Massmart's rest of Africa business he has been punted to expand Edcon's Africa business and prepare the group for an IPO.

Pattison will look to rekindle his facility for strategy and expansion after he was named on Thursday as the future CEO of ailing retailer Edcon, a position he will take up in February 2018. He will act as chief operating officer from June 5.

Speaking on the sidelines of Edcon's results presentation this week, Pattison said: "Massmart is in the past and Walmart is in the past. What I did there will have nothing to do with what I do here."

He has been on Edcon's board for the past three months as a nonexecutive director and said his expertise in general merchandising would help drive the CNA business and deepen the group's focus on strategy, rather than debt financing.

"The management team over the past several years have been so focused on financing that their strategic clarity is not necessarily there."

Edcon has 187 retail outlets in Namibia, Botswana, Lesotho, Swaziland, Mozambique, Ghana, Zimbabwe and Zambia, and the group has plans to expand its rest-of-Africa business.

For the 52 weeks to March 2017, sales from operations in the rest of Africa fell by 7%, which was below expectations.

Reflecting on Edcon's Africa strategy, Pattison said: "It has to be a very respectful strategy. It also has to be quite cautious. The economies of Africa outside South Africa are quite small and vulnerable. So they go from quick growth to running out of cash to changing presidents in politics, so they move all over the place."

Vestact portfolio manager Michael Treherne said: "There's been a lot of guys that have tried to go into the rest of Africa and they came back because of the different trading conditions. The one thing that Pattison seems to have on his side is that Edcon has bottomed out.

"He is starting on a clean slate. I don't think he would've taken this on if he still had that huge debt burden," said Treherne.

Edcon stabilised its finances after a consortium of investors bought the business from Bain Capital in a $1.5-billion (about R19-billion) debt-to-equity swap in September last year, which enabled the group to reduce its crippling debt.

Yet the retailer has been struggling to win over consumers, a situation compounded by difficult trading conditions that include weak spending and tighter credit regulations.

Sitting in the boardroom of the retail group's headquarters at Edgardale, south of Johannesburg, outgoing CEO Bernie Brookes said: "There's a lot more to do with a smooth handover and a plan [is] in place that is starting to see some green shoots. I've never planned to stay longer than two years."

Brookes, whose contract officially ends in September, will stay on with the group until the end of January next year.

Part of the plan is to spend about R100-million to revamp the CNA stores, Brookes said.

"CNA was fiddling in far too many categories; we were trying to sell confectionery, digital, stationery, gifts, toys, books, DVDs, CDs, and when you fiddle you fail. So we will take it back to its core roots, which is a good stationery gift seller, and still continue in limited ranges of magazines and books and CDs.

"The digital area will eliminate some of the categories such as toys and get back to its core roots to return to profitability."

For the period to March 2017, the group's speciality division, which includes CNA, reported a sales drop of 6% to R5.5-billion.

The apparel retailer has been criticised by industry pundits for having too many stores. Brookes expects to see more closures and fewer store openings.

Pattison will have a heavy responsibility to nurse the company back to health. For the 52 weeks to March, Edcon's group sales decreased by 6.7% to R25-billion, while adjusted earnings before interest, tax, depreciation and amortisation decreased by 45% to R1.4-billion.

But Pattison, a South African who has been preceded by three foreign CEOs, may have the task of leading Edcon into an international buyout.

When asked whether he was brought in to do this, he said a buyout by an international company was not off the cards as "there is a large interest of foreign shareholders, who are institutional or otherwise. But we've developed down a path that Brookes has led us on, the road to recovery. My job over the next six months will be to learn about that path and build a future strategy about growth."

When asked about changes to the business when he takes over as CEO, Pattison said: "I'm not sure yet, let me go and find out."

In the meantime, he will "keep my head down, hide away in my office for six months, learn the business and travel [the rest of] Africa".

tshandup@sundaytimes.co.za