Deacons joins a host of Kenyan firms that are downsizing, including banks and manufacturing firms, casting a dark cloud on the shape of the economy. PHOTO | FILE
The NSE-listed firm as attributed the closures to subdued sales, which have forced it to restructure its business.
The retailer posted a net loss of Sh278 million for the year to December compared to a Sh100.6 million profit in 2015, as revenue dipped 3.1 per cent Sh2.3 billion.
The company joins a host of Kenyan firms that are downsizing, including banks and manufacturing firms, casting a dark cloud on the shape of the economy.
Clothing retailer Deacons #ticker:DCON is set to close a number of its stores by end of next month in a move expected to render an undisclosed number of employees jobless.
The NSE-listed firm has attributed the closures to subdued sales, which have forced it to restructure its business.
The retailer posted a net loss of Sh278 million for the year to December compared to a Sh100.6 million profit in 2015, as revenue dipped by 3.1 per cent to Sh2.3 billion.
Deacons, which has 350 employees working in 46 outlets in Kenya, Rwanda, Mauritius and Uganda, last week closed Angelo at Sarit Centre in Nairobi but in this case redeployed the four employees at the store.
“We are restructuring and some stores which are not making profit will be closed. This will impact staff numbers. The process is ongoing and will be complete end of next month,” Muchiri Wahome, Deacons’ chief executive, said in an interview.
“We are still working on details and going through the paces so I do not have the details of how many stores will be closed and the number employees who will directly impacted. We are also still talking with our stakeholders.”
Deacons joins a host of Kenyan firms that are downsizing, including banks and manufacturing firms, casting a dark cloud on the shape of the economy.
When announcing its full-year results two weeks ago, the retailer said interest rate capping on lending effective last September led to a reduction in liquidity in the market, decreasing customer spending and store productivity.
Mr Wahome at the time told the Business Daily that, while there are more shopping malls across the country, the number of buyers has not increased due to lower purchasing power, invalidating the growing middle class narrative.
Additionally, the depressed economic conditions in South Africa and a systems upgrade at Truworths and Mr Price led to the undersupply, dragging the business into a loss-making position.
“All retailers are going through a rough time. Over Christmas, for instance, everybody recorded soft sales. At Deacons, we collected 75 per cent of our revenue expectations, a first for the company,” he said a fortnight ago.
Deacons, which in February opened four shops at Two Rivers shopping mall, saw its bottom-line further affected by expenses, which increased 24.7 per cent to Sh1.41 billion.
