Ellies Holdings said on Monday that it will embark on a “formal consultation process” with employees under the Labour Relations Act as it fights the impact of tough trading conditions.

The news sent its shares plunging almost 30%.

The JSE-listed company said in a statement to shareholders that the process, under section 189A of the act, relates to the “restructuring of certain operational functions”. It didn’t elaborate, but blamed “constrained” trading conditions for the move.

“As part of the section 189 process, the company and affected stakeholders will together consider appropriate measures to minimise possible retrenchments and seek viable alternatives, which will assist the group in returning to profitability and ensure the continued operation of Ellies,” it said.

“The company is committed to following the legislative processes to ensure that all affected employees are treated fairly.”

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The development comes after Ellies two months ago reported that it had swung to a full-year loss for the year ended 30 April 2022. Revenue declined by 10.8% to R1.08-billion, while headline earnings per share swung from a profit of 9.19c to a loss of 7.13c. It reported a loss after tax of R43.7-million, from a profit before of R45-million.