Ellies is down, but not out

Ellies is one of South Africa’s most iconic technology brands and its lighting, electrical, and electronic products are a popular choice among consumers.

Founded in 1979, Ellies is the leading Southern African manufacturer, importer, wholesaler, and distributor of a wide range of electrical and electronic products, and aerial and satellite equipment.

In recent years, however, the company has been struggling which forced it to implement significant job cuts this year.

The COVID-19 pandemic and lockdown put further pressure Ellies, with a knock to both its revenue and profit.

Its revenue decreased by 13.8% to R1.17 billion (2019: R1.36 billion) while its operating loss increased by 191% to R88.3 million (2019: operating loss of R30.4 million).

In its trading statement, Ellies said COVID-19 created material uncertainty around the company as a going concern.

“If the economy and as a result, the performance of Ellies, deteriorate and management is unable to stem the losses incurred in a major subsidiary, these present material uncertainty to Ellies remaining as a going concern,” it said.

Ellies added that it may not be able to realise its assets and discharge its liabilities in the normal course of business.

This raised concerns that Ellies’ future is uncertain and that it may even face closure in future.

Ellies CEO Shaun Prithivirajh responds

To find out whether Ellies is at risk of shutting down, MyBroadband spoke to Ellies CEO Shaun Prithivirajh.

Prithivirajh said there are no plans for Ellies to close. “I am confident that Ellies will not only survive, but thrive,” he said.

He said to achieve a more sustainable situation, they have to execute on their strategy to turn around the business.

Significant changes have already been implemented at Ellies, which include:

  • Migration of the Johannesburg warehousing and distribution functionality to a third party service provider.
  • Disposal of properties that are not core to their business operations.
  • Stock impairment of slow-moving and obsolete stock that was identified during the physical move to Value Logistics.
  • Integration of IT systems with Value Logistics that provide Ellies with real-time data to better manage inventory.
  • Restructuring of Ellies’ head office functionality which has improved their OPEX and effectiveness.

“The above strategic initiatives have already started to show positive results in the first quarter,” Prithivirajh said.

The focus for the remainder of the year is to fully upgrade their ERP system, continue to extract value from its MultiChoice partnership, and grow its connectivity partnership with Vox.

“A key strategic growth driver is alternative energy, especially solar. We have developed and secured innovative product offerings in this space and are in the process of going to market,” said Prithivirajh.

“We will also continue to interrogate products, partnerships, outlets and business units that are not profitable so as to prevent any contagion effect on the group.”

Ellies and Vox partnership

In January 2020, Vox entered into a business partner agreement with Ellies as part of a commitment to work together in expanding their respective product and solutions portfolios.

This partnership will allow Vox access to over 4000 satellite installers who will be able to promote and install Vox’s satellite service.

This will also give Vox reach in areas where they do not have offices. The partnership will also allow Ellies to extend their offering to include the entire ICT stack.

The photo below shows Ellies CEO Shaun Prithivirajh and Vox CEO Jacques du Toit during the official announcement of the partnership.

Now read: Ellies to cut 183 jobs

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Ellies is down, but not out