Johannesburg - Eric Ellerine will step down from Ellerine Holdings as managing director, withdrawing operationally from an industry he partially defined and created in South Africa over the past 49 years.
He will remain the executive chairman. His replacement, yet to be announced, is from within the group, which is the country's second-largest furniture and appliance store. "It will be difficult for someone to come in and fill those shoes," said Eric Levin, an analyst at Investec Securities. "He built a very powerful company in the ups and down over many years." Ellerine was regarded as one of the country's foremost businessmen as aresult of the company he built from nothing over five decades. What the move means for the group has yet to be illustrated. One analyst said he did not expect much change, given that the market had known about Ellerine's move for months already. Market perception is that his recent involvement has steadily decreased. The Ellerine family holding in the group has, in fact, whittled down to just under 3 percent (nominee companies cannot be accounted for).
Ellerine Holdings held the fort for many years in its target market of lower-income earnings. Long recognised as the blue chip of the furniture sector, over the past few years the group has had to counter competition from the JD Group (the reconfigured Joshua Doore group after listing in 1981) and Profurn (listed in 1969).
Ellerine grew dramatically in the late 1980s and recorded more modest growth in this decade. Its rating as the foremost buy in the sector has been toppled; it now holds second place behind the JD Group in turnover. Ellerine himself embodies the self-made man. At school he realised his parents did not have the money to send him to university to study medicine, so he made the wisest investment any young boy can make with his Barmitzvah money: he left school and started his own retail furniture business in
Germiston with =A3106 (R216). =46ive decades later the business has weathered economic turmoil, sanctions and globalisation and has outlets throughout the country. Ellerine Holdings, which also has stores in Namibia, Swaziland, Lesotho and Botswana, is on the verge of a pilot financial services project for a form of microlending in which cash is made available and paid back over three to six months Ellerine has targeted the middle-range income bracket through Furncity, the furniture company with 50 outlets countrywide. The group has a sophisticated insurance element.
Certain issues have been raised about the group. One analyst said it lacked management direction and there was confusion about "who is calling the shots". He said Sanlam, its biggest shareholder, had no board representation, which enables management to have more of a free hand than most listed companies. =46rom April 24 last year, when the company attained a peak of R53,10, it shed 80 percent to plummet to R19,30 on September 8 last year. But the entire retail sector suffered more in last year's market correction than most industries. Retail furniture is particularly sensitive to interest rates, which skyrocketed last year.
Since last September, when interest rates took a breather, the sector has outperformed the all-share index and now looks steady. Ellerine's share price has steadily regained ground since the beginning of the year but has been falling for the past two weeks. It closed unchanged yesterday at R21. Ellerine has received several awards, including South Africa's Jewish Business Achiever of the Year.