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Tue 5 Oct 2004, 12:29 Edgars gets in bed with tyres
Edgars gets in bed with tyres 

 By: Ron Derby
 
 
Posted: 2004/10/04 Mon 15:04  | © Moneyweb 1997-2004
 
 
JSE-listed retail group, Edcon has tied up with Tiger Wheel & Tyre in a deal that will see the fashion retailer’s Financial Services division manage, fund and administer a private label credit card for Tiger Wheel & Tyre. 
Executive manager of Investor Relations at Edcon, Tessa Christelis says that the venture was not really about trying to benefit further from the country’s low interest rate environment and hence the burgeoning consumer confidence levels. Instead, she says the prime motive was acquiring more customers for Edcon. The contract lasts for an indefinite period.

“Another thing is that they (Tiger Wheel & Tyre) will pay us a fee that we have not disclosed at this stage,” she adds, based on a percentage of the sales. 

Peter Chambers, financial director of Tiger Wheel & Tyre, reckons the group’s credit division business for consumers could generate conservatively R18-m plus a year. The group has credit extensions with corporates such as Super Group and McCarthy.

Christelis said the partnership with the tyre retailer would not have a material impact on Edcon’s earnings at present, but would have much more of an impact on the financial services division.

In a statement from Edcon, group financial services executive, Ian Wood said: “This transaction will see Edcon Financial Services extend its reach beyond the Group’s current 3,1-m account holders to service the credit needs of Tiger Wheel & Tyre customers as well.”

According to Christelis, Tiger Wheel & Tyre was the one looking for a partner to manage its debtor book. “It is a way for us to leverage off our existing infrastructure, and the group is not a competitor to us.”

Chambers said the logistics that go with managing a debtor’s book for its customers was a massive task that the group could not undertake on its own. “We had lots of requests from our customers to offer credit and so we went to the marketplace to find someone to do a deal with us.”

Edcon will provide a full credit service to Tiger Wheel & Tyre, which includes granting credit, funding the book and offering related customer services and collection activities.

Christelis says that there are considerable cross marketing opportunities in the partnership: “Offering Edcon account holders incentives and vice versa.”
 
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