Mr Price store at the Junction in Nairobi. file PHOTO | NMG
South Africa-based Mr Price Group has taken direct control of
its Kenya business after reclaiming its franchise from fashion apparel
retailer Deacons East Africa.
The two firms on Thursday
announced that Mr Price will from April 1 assume the operations of its
11 Mr Price stores in Kenya. Deacons had held the Mr Price Kenya
franchise for a decade.
The Nairobi Securities
Exchange-listed firm mid last month agreed to sell the Mr Price Home and
Mr Price apparel brands, which have been operating in Kenya since 2007,
effectively ending Deacons’ 10-year franchise deal with the
Johannesburg Stock Exchange-listed company.
“Notice is
given under the Transfer of Businesses Act that the Mr Price franchised
business carried on by Deacons (East Africa) Plc will be transferred on
or about April 1, 2018, (subject to the fulfillment of conditions
precedent) to Mr Price Retail Kenya Limited which will carry on the
business,” said the firms yesterday in a regulatory notice.
The firms added Mr Price would now assume all financial obligations related to the business.
“All
money debts or liabilities due and owing the transferor in respect of
the business up to the date of transfer shall be received and paid by
the transferor,” they said.
“The transferee is not
assuming nor is it intended to assume any liabilities incurred by the
transferor in the business up to the date of transfer.”
The
Deacons board approved plans to sell its flagship Mr Price franchise in
Kenya last October. The proposed deal came amid a 12 per cent drop in
earnings for the Johannesburg-based firm, marking its first decline in
annual profit since 2001 as South African consumers slowed purchases in a
struggling economy.
Deacons,
which operates several branded stores in Kenya including Truworths,
Angelo, 4u2, Reebok and Babyshop, has indicated that its earnings for
the full-year through December will drop by at least a quarter, citing a
tough operating environment.
Deacons’ exclusive
franchise deal with another South Africa’s luxury fashion brand
Woolworths ended in 2013 after the multinational took full ownership of
its Kenyan subsidiary.
Deacons posted a half-year net loss last year of Sh180 million.
Deacons’
principal business is to operate retail establishments including
franchise and department stores selling ladies, men’s and children’s
clothing, footwear and accessories among other items in East Africa.
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