By Lynn Bolin

Listed retailer Edgars Consolidated Stores (Edcon, ECO), already South Africa’s largest retail group by turnover, has acquired the business of Boardmans from fellow retailer Pick ‘n Pay (PIK) for approximately 94 million rand, the two groups announced on Friday.

Boardmans sells a wide range of furniture and home furnishings such as kitchen, bed and bathware.

It is the second major acquisition by Edcon in 2003, following its purchase of over 100 CNA stores, selling stationery, books and other print and paper goods, earlier in the year.

Edcon currently trades under the store brands Edgars, Jet, Sales House, Cuthberts, ABC, Red Square, CNA and Supermart.

Edcon Chief Executive Steve Ross said that the purchase would be made using Edcon’s cash resources. He said the impact of Boardmans to Edcon’s existing revenue would be minimal at 2%, but expected the acquisition to be earnings enhancing within the next three years.

Boardmans trades out of 26 stores countrywide, with a selling area of 30,000 square meters. Turnover was 211 million rand for the year ended February 2003, with a sales mix comprising predominantly kitchenware, furniture and outdoor goods, with soft goods (bedding, towels, curtains, etc) contributing 4% of sales.

Boardmans complemented the homewares business of the Edgars chain, Ross said, which had an annual turnover of around 250 million rand, comprising almost exclusively soft goods.

Boardmans had a well established brand name and a similar target market to Edgars, with stores in prime locations that would give Edcon an immediate presence in the homewares segment of the market.

"The purchase of Boardmans supports our strategy of making select acquisitions of reasonably priced businesses in the non-food retail area and we are very excited about the potential for growth from bringing Boardmans into the Edcon group," Ross said.

Boardmans had a similar target market to that of the Edgars chain, he added.

"Edcon will now be in a position to offer our existing customers a greater selection of merchandise.  We also plan to extend credit to Boardmans' customers, thereby providing them with an additional service from the Edcon group, as well as enhancing our existing financial services business," he explained.

"Moving forward we will seek to leverage off Edcon's existing IT and distribution platforms as well as the finance, human resources and marketing divisions run out of our Head Office.

All Boardmans staff would be retained with no change to their employment status or conditions - "an important consideration in the sale of Boardmans".

The business would leverage off Edcon’s existing IT, distribution platforms and head office infrastructure in the areas of finance, human resources and marketing and would benefit from Edcon’s core competencies in these areas.

There was also an opportunity to offer credit to customers of Boardmans.

The financial effect on Edcon shareholders was not considered to be material in the short-term, Ross added.

The acquisition was subject to the assignment or subletting of certain leases to Edcon and to approval by the competition authorities.

The effective date would be 1 April, 2004, if the conditions had been fulfilled by 15 March, 2004, and if not, would be the third Monday of the month following the fulfillment of the last of the conditions.

I-Net Bridge