NAIROBI, Kenya, Oct 9 – Deacons EA Plc has received board approval to enter into negotiations for the sale of the Mr Price franchise in Kenya.
The move comes after Mr Price Group Limited approached Deacons EA Plc with a proposal to purchase the franchise.
The proposed transaction will be subject to various conditions that include requisite approvals from regulatory authorities and the shareholders of Deacons through a shareholders’ meeting to be convened once the sale agreement has been finalised.
The South African company is looking to purchase the Mr Price Home and Mr Price apparel brands following the success of the brands in Kenya since they entered the market in 2007.
The deal, if approved, will see the firm purchase and operate all the 11 Mr Price Home and Mr Price apparel stores in Kenya.
Deacons Chief Executive Officer Muchiri Wahome said further information relating to the proposed deal will be circulated to the company’s shareholders prior to a shareholders’ meeting to consider the proposed transaction.
“In the meantime, the shareholders of Deacons and other investors are advised to exercise caution when dealing in the shares of the Company,” he said.
Deacons also operate the F & F, Bossini, Adidas, 4 u 2, Truworths and Lifefitness brands.
The company posted a 244 per cent increase in losses in the first six months of 2017 to Sh180 million compared to Sh52 million loss in the first half of 2016.
The loss was attributed to the drought that led to the reduction in disposable income coupled with lack of consumer credit due to the interest rates capping that has limited private sector lending.
The firm also blames the reduction of footfall into malls by 60 per cent due to the non-performance of major supermarket anchor tenants.
“Ninety eight per cent of our stores operate in malls whose anchor tenants are experiencing stocking challenges,” Wahome told Capital FM Business.
The fashion retailer has set aside Sh10 million for an e-commerce platform that is part of a strategy to boost sales in the wake of plunging income.