Well-known South African retail brand enters business rescue

West Pack Lifestyle, one of South Africa’s most recognisable retail brands, has entered voluntary business rescue proceedings.

Matuson Associates published details about the business rescue proceedings of West Pack Lifestyle last month.

It said West Pack’s board of directors adopted a resolution on 9 May 2024 to voluntarily commence business rescue proceedings.

The notice of the beginning of business rescue proceedings was filed with the Companies and Intellectual Property Commission on 15 May 2024.

The company nominated Grant Chittenden, Jenna Osborne and Lance Schapiro to be its joint business rescue practitioners.

West Pack comprises numerous companies, including West Pack Lifestyle, West Pack Lifestyle Distribution Centre, West Pack Franchise, Petzone, and Petzone Franchise.

The group’s related companies further include Café Estreito, Café Estreito Franchise, and Beija Flor Investments.

West Pack employs 924 employees, and the business rescue proceedings aim to save the company and these jobs.

The company said it was financially distressed and was unlikely to pay its debts when they become due over the next six months.

West Pack explained that it landed in financial trouble because of its accelerated growth path, which strained its cash flows.

It said the high capital cost of opening stores and the increased inventory mix depleted the company’s cash and ability to repay debt.

Another problem was that West Pack’s unsold inventory increased because of the incorrect product mix.

The working capital constraints prevented the company from buying the right products to fix its product mix.

West Pack added that South Africa’s struggling economy and load-shedding caused further hardship.

These factors caused the retailer’s turnover to steadily decline over the last few months. As such, it has not met its budgeted revenue.

It resulted in West Pack trading at a loss, which has “put considerable pressure” on its cash reserves.

Despite these challenges, West Pack said there was a reasonable prospect of the company being saved.

The company is now executing initiatives to restructure the business and drive its turnaround.

These initiatives include exploring offers to acquire some of West Pack’s assets or the full business.

It is also considering a corporate finance transaction and selling non-core assets to improve its financial position.

Operationally, it is improving procurement procedures to achieve optimal stock levels and a better product mix.

It is further reducing overhead expenses and is restructuring the business to achieve an ideal retail footprint with market-aligned rental rates.

“By implementing the above initiatives, there will be a reasonable prospect of rescuing the company,” it said.

West Pack history

West Pack’s history dates back to 1996, when a father-and-son team aimed to give South Africans the opportunity to experience shopping as an adventure.

West Rand Pack, its sister company, was launched in 1996. The stores can still be found in Krugersdorp West today.

West Rand Pack in Krugersdorp West made a grand entrance in retail, selling plasticware and packaging.

In 2008, West Pack Lifestyle was born. The name originated from the original store. However, the Rand was dropped as it aimed to roll out stores in other regions.

The company launched a franchising division in 2013 called West Pack Lifestyle Franchise. In the same year, West Pack Express was introduced.

In 2017, West Pack added Petzone to its retail group, offering clients dog food, cat food, pet harnesses, toys, health, and grooming products.

West Pack celebrated its tenth anniversary in 2018. At the time, it boasted 47 stores within the group.

“We want to be part of your everyday journey, whether it’s packing your leftovers and your children’s lunch to organising your home and office,” it said.