Deacons #ticker:DCON has reported a net loss of Sh278 million for the year to December, compared to the previous year’s Sh100.6 million, as lower sales saw the NSE-listed fashion retailer slip into the red.
The retailer’s revenues dropped 7.4 per cent to close the year at Sh2.3 billion due to supply challenges from South Africa in the second half of the year under review and lower customer numbers in existing malls.
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.
“The delay in mall openings for 8 stores contributed to the increase in the operating costs due to an earlier deployment of shop fittings, staff and stock,” the retailer said in a statement.
“The delay in the launch of all green field malls led to a slow start for the new stores. While not fully let, these malls have shown progressive growth and are expected to mature in the medium-term.”
The retailer also said that interest rate capping on bank lending effective last September led to a reduction in liquidity in the market, decreasing customer spend and store productivity.
Going forward, Deacons’ management expect that stores opened late last year and early 2017 – such as F& F at the Hub and Sarit Centre, will bear fruit as “sales to date have been encouraging.”
“The sales from these new outlets and the full year impact of the stores opened in 2016 are expected to contribute to overall sales growth in 2017,” the retailer noted.
“The directors do not recommend the payment of a dividend in respect of the financial year ended December 2016.”
Deacons, which operates 46 outlets across Kenya, Rwanda, Mauritius and Uganda, in January said it has hit the brakes on expansion plans and consolidate its business and reel in costs.