South Africa-based Mr Price Group has taken full charge of its Kenya business, reclaiming its franchise from fashion retailer Deacons East Africa.
In an announcement made on the Nairobi Securities Exchange, Mr Price will from April 1 assume the operations of its 11 Mr Price stores in Kenya.
The move will end a decade of running the brand by Deacons in Kenya.
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 in a public announcement.
The new developments will see Mr Price assume all financial obligations related to its 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,” the joint statement read.
“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.”
Deacon’s 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.
This is in the wake of South Africa’s struggling economy,which has affected consumers purchasing trends.
Deacons operates several branded stores in Kenya including Truworths, Angelo, 4u2, Reebok and Babyshop.
The NSE listed firm has issued a profit warning, indicating that its earnings for the full-year through December will drop by at least a quarter, citing a tough operating environment.
Last year, Deacons posted a half-year net loss of Ksh180 million.
By Martin Mwita