Edcon could cut head office jobs

Johannesburg - Retailer Edcon launched a cost-cutting plan that may include job cuts, it said on Tuesday, as the debt-burdened company tries to save money to pay down debt.

"This process may result in a reduction of headcount within Edcon's head office. We cannot confirm numbers as yet," the company said in statement.

Concerns are growing about Edcon's ability to repay bondholders after Morgan Stanley published a note in September supporting a short position of the company's debt, saying the capital structure was "unsustainable".

Earlier in January Edcon's bondholders signalled that the retailer needs a debt overhaul.

Yields on the clothing merchant’s callable June 2019 euro-denominated notes jumped to a record 66.3% yesterday, climbing more than 25 percentage points over the past three months, according to data compiled by Bloomberg.

The $501m of bonds issued in November 2013 are the worst performing of all high-yield corporate securities this year, the data show.

South Africa’s biggest non-food retailer, owned by Bain Capital Partners since 2007, is struggling with rising interest costs and waning financing opportunities as high inflation and unemployment of more than 25% hurt consumer spending.

The Johannesburg-based company said in November that it lost R1.1bn in the six months through September 27. It owes almost R2bn rand in debt payments this year, according to data compiled by Bloomberg.

READ: Edcon bonds signal debt overhaul needed