The Kenya Business Of Mr Price Sinks In Millions Of Losses
South African fashion retailer, Mr Price, has suffered Sh 84 million loss in its Kenyan operation in the 10 months ended March.
This is yet another blow for the unit which in January posted a Sh 91 million loss in the five months ended September, the loss has mainly been attributed to start-up costs.
In 2018, the multinational ventured on an acquisition spree, it spent Sh 133 Million to acquire 12 stores from its former partner Deacons, East Africa.
“From the date of acquisition, revenue contributed was R146 million (Sh1 billion) and net loss contributed was R12 million (Sh84 million), affected by once-off start-up costs,” the firm said in a trading update.
However, it noted that the new venture boosted the firm’s sales beyond South Africa and also helped to narrow the net loss from Sh91 million reported in the first five months of operation.
The South African firm increased its revenue to Sh 1 billion in the six months ended June 2018, from the Sh 378,000 generated by Deacons East Africa, which initially handled the business.
The company currently lists 11 stores in Kenya — five mrpHome stores (selling home decor) and six mrpApparel branches (stocking clothing).
Initially, the two firms had fallen out over a deal where Deacons EA blamed Mr Price for reduced trade margins after its revenue declined by Ksh303 million (USD 3 million) in the year ended December 2017.
Eventually, Deacons EA earned sh133.3 million (USD 1.3 million) from sale of its Mr Price stores to the Durban-based firm.
The troubled fashion retailer also lost its Woolworth franchise before going into a voluntary administration of PKF Consulting in November last year after sinking in debts owed to suppliers and banks.
The Nairobi Securities Exchange-listed firm gained Ksh470 million (USD 4.7 million) when it transferred the Woolworths franchise to Woolworths Holdings of South Africa.
Featured Image Courtesy: Westgate.co.za
