As South Africa goes into a 21-day nation-wide lockdown, The Foschini Group [JSE: TFG] – whose brands include Foschini Stores, @home, Markham, Totalsports and Sterns – said it’s stopping rental payments because of the impact of the coronavirus outbreak.
This comes days after Edcon Holdings Ltd., SA’s second-biggest clothing retailer, said it may not be able to re-open after the 21-day lockdown.
The Foschini Group (TFG), which account for the bulk of its 2,582 outlets across Africa, are closed after President Cyril Ramaphosa ordered a three-week national shutdown from March 27 to combat the pandemic.
While essential services such as grocers, pharmacies, banks and gas stations are allowed to remain open, clothing retailers are not.
The Cape Town-based owner of Totalsports and American Swiss jewelery chains is also halting any planned expansion projects and will delay store refurbishments, TFG said in a letter to its landlords seen by Bloomberg and verified by the company.
“Once the situation normalizes we will then be able to assess the full financial impact on the business and will engage with you further,” it said.
Edcon, which had already been under financial strain, said what it’s experiencing is an indication of the challenge that many other businesses and the government will have to face after the shut down.
Although yet to recover from Edcon’s woes, Retail landlords are set to face even more intense pressure as Walmart-owned Massmart announced recently the closure of 23 DionWired stores accross the country.
TFG, which operates in South Africa, Australia and the UK, occupying space in major centres, went against the prevailing retail trend by producing positive trading updates in a difficult economy. The group pushed up turnover 5.9% for the nine months to 28 December 2019, compared to the corresponding period in 2018.
Coronavirus crisis in South Africa
Health minister Dr Zweli Mkhize on Friday announced that the number of confirmed coronavirus cases in South Africa has hit 1,170 – an increase of 243 cases since Thursday’s report, while one person has passed away from complications caused by the virus.
Globally, coronavirus cases have reached 607,239, with 27,677 deaths recorded and 134,288 recoveries to date.
South Africa is also facing additional headwinds after ratings firm Moody’s downgraded the country’s credit rating to below investment grade, late Friday evening.
Moody’s downgraded South Africa’s long term foreign and local currency debt ratings to ‘Ba1’ from ‘Baa3’ with a negative outlook.
Source: SA Commercial Property News http://www.sacommercialpropnews.co.za/property-companies-news/9253-foschini-group-to-skip-rental-payments-amid-sa-lockdown.html