(Updates with company comment in fourth paragraph.)
June 6 (Bloomberg) -- Edcon Holdings (Pty) Ltd., the South African clothing retailer controlled by private-equity firm Bain Capital LLC, said its annual net loss widened as foreign- exchange gains on corporate notes declined.
The loss in the 12 months through April 2 totaled 1.84 billion rand ($273 million) compared with 1.16 billion rand a year earlier, the Johannesburg-based company, South Africa’s largest clothing retailer, said in its annual report published today. Sales rose 2.9 percent to 25.6 billion rand.
Bain, based in Boston, bought Edcon in May 2007 for 25 billion rand in an effort to tap rising consumer spending in Africa’s largest economy. The retailer, whose chains include Edgars, Jet, CNA, Boardmans and Red Square, closed a net 47 stores during the year, leaving it with 1,181 outlets.
“We believe that the South African economy is improving, and that the outlook remains positive, despite some short-term challenges, such as job losses,” the company said. Trading profit rose as the company improved marketing and buying, and tighter cost controls.
About 94 percent of Edcon’s sales were made in South Africa, with the balance coming from Botswana, Lesotho, Namibia and Swaziland. Currency gains on the company’s notes fell to 230 million rand from 4.6 billion rand a year earlier.
Trading Profit Rises
Trading profit, which excludes interest, taxes, financing costs, financial derivatives and currencies, climbed 14 percent to 2.4 billion rand. Earnings were helped by increased marketing efforts, purchasing and cost controls, it said.
Edcon said risks to its business include wider competition from Wal-Mart Stores Inc., which on May 31 received conditional approval from antitrust authorities to buy a 51 percent stake in South African wholesaler Massmart Holdings Ltd.
Retailers competing for market share, especially those with bigger financial resources and purchasing power, “can place and will continue to place pressure on our pricing strategy, margins and profitability and could have a material adverse effect on our financial condition and results of operations,” Edcon said.
--Editors: Tom Lavell, Robert Valpuesta.
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