Five Big Businesses Closing Down in South Africa in 2024

In 2024, South Africa has seen several notable business closures, reflecting the harsh economic climate that companies are currently navigating. Notable brands like Ellies, Hohm Energy, Zando’s owner Jumia Technologies, Drip Footwear, and The Cross Trainer have been unable to survive escalating financial challenges. Despite an overall 5.9% decrease in liquidations compared to 2023, with 1,020 companies shutting down as of August, the persistent challenges in the business landscape are undeniable.

Here’s a closer look at the five major companies closing their doors and the reasons behind their liquidation:

1. Ellies (Liquidated, Brand Sold)

Once a prominent Johannesburg Stock Exchange (JSE) listing, Ellies built its brand by selling TV aerials and later expanding into satellite TV equipment and renewable energy. Unfortunately, the government’s delay in digital migration, compounded by financial losses and an inability to secure funding for an acquisition, led to the brand’s downfall. Following its liquidation, SMD Technologies acquired the Ellies brand in South Africa, hoping to revive its legacy.

2. Zando (Ending Operations)

Jumia Technologies, which operates Zando in South Africa, announced its exit from the country by year-end, citing intense competition and the need for cost-cutting. In its final days, Zando is offering clearance sales. This exit is part of a wider trend in the South African retail sector, which has seen closures of brands like Snatcher and challenges for Superbalist, which is planning major retrenchments due to similar economic pressures.

3. Hohm Energy (Liquidated)

Hohm Energy, a key player in South Africa’s solar market, recently entered voluntary liquidation. Despite forming partnerships with banks for rooftop solar financing, the company struggled with cash flow issues as demand declined following load-shedding improvements. The collapse of Hohm Energy highlights the challenges faced by South Africa’s energy sector, with other notable closures, including Ellies, pointing to similar pressures.

4. Drip Footwear (Liquidated)

Founded in 2019, Drip Footwear quickly gained a following as a locally-made sneaker brand. However, financial troubles, including a R20 million advertising bill, led to its liquidation. The court-ordered liquidation has impacted Drip’s 14 retail stores and its employees, who faced irregular salary payments. This is a significant loss for the retail sector, underscoring the economic challenges that have driven multiple companies into financial distress.

5. The Cross Trainer (Liquidation Pending)

The Cross Trainer, operated by Frame Leisure Trading, is another major retail brand facing liquidation after a failed business rescue attempt. The sports retailer has struggled with cash flow issues due to the impacts of COVID-19, the 2021 unrest, and insufficient compensation for damages. Although a potential consortium, Connecting Creativity, attempted to save the business, its proposals were ultimately rejected, leading to liquidation proceedings.

Economic Challenges Contributing to Liquidations

South Africa’s challenging economic environment has played a critical role in these closures. Rising inflation, high interest rates, and reduced consumer spending have forced many companies to shut down. The South African Reserve Bank’s rate hikes have aimed to curb inflation but have strained businesses, especially in sectors like retail and accommodation.

According to the Reserve Bank, “The cumulative effects of inflation and higher borrowing costs are leading to reduced investment and consumer spending, pushing many companies into financial distress.” Experts warn that while the decrease in liquidations from 2023 may be a positive indicator, the underlying pressures on South African businesses are far from over.

The closure of prominent companies like Ellies, Zando, Drip Footwear, and The Cross Trainer reflects the economic challenges gripping South Africa in 2024. Although liquidation rates show a modest decline, the impact on big businesses signals the difficulty of sustaining operations amidst ongoing economic pressures. These closures are a reminder of the pressing need for economic reforms and support to stabilize the business landscape.