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Shock after 43 Just On stores close

| Economic factors

Five hundred employees of East London-owned Just On Cosmetics were sent home when 43 stores shut their doors just over a week ago.

The beauty care and household business, which were bought as a faltering concern a year ago by the Pocot Trust, of which East London magnate Tony Cotterell is one of three trustees, are now in limbo and jobs are on the line as the owners “evaluate the business”.

Just On Cosmetics procurement manager Ricardo Calaca said the closures were a result of the stores’ biggest supplier, which provides 80% of the stock, having cut credit to the stores, despite Just On Cosmetics being fully paid up.

And, while rumours swirled that Just On had gone into liquidation, this was strenuously denied by Calaca, who said it was dealing with between six and 10 potential “blue chip” buyers. “We are hoping one of them will [take on] all of the stores,” he said. “They are interested in certain stores or [all stores] as a going concern so we couldn’t just lay off people because we want to get the best value [from the sale].”

He said Cotterell, who owns the Kempston Group, had poured R80 million into the floundering business. “He has been the saviour of this whole business. He rescued the business, which was about to go into liquidation, and he was committed to looking after people,” said Calaca.

On Friday, Judge Judith Roberson granted an urgent application argued by attorney Mark Nettelton on behalf of Investec bank “to perfect” Investec’s security in terms of a bond it held over Just On’s assets.

This gives Investec control of stock and assets. The application was not opposed.

Investec recoveries manager Michelle Macgillivray said in court papers that the bank had loaned Just On R41.6-million, which it had secured via a bond and was now entitled to take possession of all the company’s movable assets.

Just On Cosmetics was started in 1991 by Mike Naidoo, who opened the first store – then called “Mike the Cosmetic King” – in King William’s Town and grew the business into a flourishing empire. However it fell on hard times after Naidoo’s death four years ago.

Calaca said after their credit line had been pulled by the supplier’s insurer the stores’ shelves ran low on stock, leading to a further loss in business and customer confidence.

On Saturday, September 26, Just On regional managers visited all the stores, 35 in the Eastern Cape, three in the Free State and five in Zululand, KZN, and told them that the stores were closing immediately.

“People were just told to go home for now and be on stand-by until we know where we’re going,” he said.

Five staff members and a security guard at one of the Just On Cosmetics stores in York Street, Mthatha, reacted to the news by helping themselves to R10 000 worth of stock, while another ran out of the store with R4 700 takings, Calaca said.

Disappointed staff at the Sterkstroom and Idutywa branches insisted that the bad news be confirmed by MD Craig Hanafay and asked for termination letters.

In August, 70 workers were retrenched at the company’s Wilsonia distribution warehouse due to “costcutting”, Calaca said.

Just On Cosmetics’ former operations manager John McClure said the latest events had “a devastating effect on people. The staff gave everything to turn the business around. They are solid gold,” he said.

Calaca said staff had been paid until the end of September, but there was “no money in the business to pay creditors due to credit lines having been cut.

Creditor Kobus Fourie, who owns Mapogu Security, said he was owed R246 000 and was unable to pay 80 security guards.

“I had guards striking at my office last week with some saying they want to commit suicide,” said Fourie, who claimed he was appointed on September 1 to supply the Just On Cosmetics stores with security services.

Although he had been paid R110 000 for his travel costs as well as money he had spent on new guard uniforms, batons, handcuffs and radios, he was out of pocket to the tune of R246 000 for salaries.

He said Just On called him on September 25 saying they could not pay him. “I can’t pay the guards’ salaries. I’m not a huge company. When I met with Just On they told me to ‘go lend money’. I am sitting without a single cent. I am going to lose my business now.”

Creditor Hansie Doubell of JKJC Solutions, said Just On owed him R15 000 for lie detection and investigation services he had performed last month. “They didn’t pay me a cent and I’m not a happy camper.”

Border-Kei Chamber of Business director Les Holbrook said the closures were “very sad”.

“It’s a good company and a good organisation offering lots of jobs, so this is a great tragedy,” he said.

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