Edgars has replaced its CEO and its Chief Finance Officer, as majority shareholder Sub-Sahara Capital Group (SSCG) makes changes to shore up the struggling clothing retailer.
Tjeludo Ndlovu has stepped down as CEO and leaves the company with effect from 31 October. She has been CEO of the company since 2020, when the company was battling to stay afloat during COVID. Also leaving is CFO Happiness Vundla, who was appointed to the post in 2021.
The new CEO is Sevious Mushosho, a former executive of SSCG, who was appointed to the Edgars board after SSCG bought the majority stake from South Africa’s Edcon in 2019.
Like many formal retailers, Edgars is facing declining profits due to currency distortions, rising inflation and competition from the informal market.
Edgars was hit hard by COVID, losing seven trading weeks in the 2021 due to lockdowns. When its stores finally reopened, the company found itself with a buildup of old merchandise that customers didn’t want, which hit its stock turn levels. Edgars had to put the merchandise on sale to clear it.
In 2021, Edgars said it had to increase borrowings to pay rentals, utility costs, and “ensuring that our employees were remunerated on time”. There was more trouble last year when central bank sharply increased interest rates to 200% to try and tame inflation. This saw Edgars’ finance costs rising by 177%.
“The business was not able to recover these costs from our customers,” Edgars reports in its last annual financials.
Clothing retailers such as Edgars have to order and pay for merchandise six months before it is delivered. The merchandise is then sold on a six-month basis, and high interest rates mean the business makes losses.
Edgars is the largest clothing retailer, with over two dozen branches. It also has 25 Jet Stores, the Club micro-finance unit as well as Carousel, the garment manufacturing factory based in Bulawayo.
Who is SSCG?
SSCG is a private fund based in Mauritius. It bought 41.75% of Edgars from South Africa’s Edcon in 2017. It has ties to Innscor shareholders. Mushosho, who represents SSCG, has worked for Innscor Africa and Distribution Group Africa, a unit of former Innscor subsidiary Axia.
SSCG also bought Innscor’s stake in Capri in 2022 and was, according to a regulatory filing last year, a shareholder in Mafuro Farming, an Innscor subsidiary. Previously, SSCG was invested in Vast Resources, which later sold a mine to Padenga, a company that has common shareholders with Innscor. Matt Fowler, who sits on the board of Padenga’s gold subsidiary Dallaglio, is one of the founders of SSCG.
In 2018, SSCG also helped shore up troubled airline fastjet with a US$2 million loan. SSCG also has an interest in micro-finance company Untu Capital.