Abil gets Ellerines to slash 2 000 jobs, close 81 outlets
Feb 12 2009
Retail Wrap >>

Ellerines had retrenched more than 2 000 workers in the past year and closed 81 stores as new owner African Bank Investments Limited (Abil) moved in to execute a cost cutting programme at the furniture retailer.

Both Abil and JD Group were now more confident that the worst was over in their cyclical credit retail chains, after they moved to rid poor paying customers from their books.

Ellerines staff was reduced by 12 percent to 15 351, while the stores were cut by 6.5 percent to 1 161 after the furniture sector was found to be overtraded in the downturn.

Product sales for the first quarter were down 24.4 percent to R1.4-billion as Abil tightened lending criteria at Ellerines, because the retailer had been too "liberal" before the acquisition in 2008.

Credit acceptance rates declined from 73 percent in the quarter to December 2007 to 67 percent in the same quarter last year.

The 67 percent acceptance rate was up from a low of 56 percent in April, as the group opened its doors to easier credit on the belief that the worst bad debts were being worked out of the system.

Abil said it expected Ellerines sales to increase 10 percent in the last nine months of this financial year.

Retail margins had firmed due to better merchandise management, the bank said, without giving further details.

Adapted from Source: www.busrep.co.za, 11 February 2008.