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.