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Deacons fashion house continues to crumble

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Troubled fashion retailer Deacons is on the slow burner.

Letting go of stores seems to have become the new norm for the fashion house, and a notice in a local daily on May 21 reflects more creaking walls for Deacons.

The firm has put up for sale six of its stores located in prime upmarket locations, with shops at Sarit Center, Yaya Centre, Two Rivers Mall, Village Market and Garden City on the chopping board. It will also sell a store in Rwanda.

Adidas shops at Sarit Center and Two RIvers Mall, as well as the 4u2 store at Sarit Center have been earmarked for sale.

Also on the list of stores that Deacons is shedding off are; Bossini (Two Rivers Mall, Yaya Center, Village Market, Garden City and Rwanda) as well as the F&F at Sarit Center.

The move is meant as a “recapitalisation of the company through injection of equity” so as to restructure its debt obligations. It may also allow the suspended listed firm to sell “all or some of the store of the company.”

Deacons’ administrators have appointed Dyer and Blair Investments Bank as the transaction advisor. The appointed bank will shortlist prospective buyers following expression of interest by bidders.

According to the notice, shorlisted bidders will then “be provided with a detailed information memorandum of the assets and an opportunity to view the assets and subsequently submit financial offers.”

[Read: Billionaire Narendra Raval buys ARM Cement’s Kenya assets for Sh5b]

Franchises that Deacons held;

1. Babyshop – Kenya (Franchise)

2. Truworths – Kenya (Franchise)

3. Mr. Price – Kenya, Uganda and Rwanda (Franchise)

4. Mr. Price Home – Kenya and Uganda (Franchise)

5. Adidas & Reebok – Kenya (Distribution Agreement)

6. Lifefitness – Kenya, Uganda, Tanzania, Rwanda and Burundi
(Distribution Agreement)

7. Bossini – Kenya, Uganda and Rwanda (Distribution Agreement)

8. 4U2 – Kenya (Own Brand)

9. Angelo – Kenya (Own Brand)

10. F&F – Kenya (Franchise

Last November, Deacons was suspended from the Nairobi Securities Exchange (NSE) following the financial constraints that had led to administration.

Initially restricted from trading shares at the bourse for 40 days, the suspension was eventually extended.

The suspension by the bourse was done so as to allow the administrators appointed to the Deacons Board to run its business according to the Insolvency Act.

Deacons chief executive Wahome Muchiri had said he was not aware of any insolvency proceedings being instituted against the firm.

“…The primary objective of placing the company in administration will be to enable the administrators to explore the possibility of rescuing the company as a going concern or achieving a better outcome for the creditors than would like be the case if the company were to be liquidated,” he said in a statement in November 2018.

[Read: Safaricom free 5GB offer locks out millions without smartphones]

At the time of being suspended from the NSE, Deacons share price stood at Ksh0.45.

Its last full year financial results for the year ended December 2017 had seen the firm plunge to losses of Ksh841.4 million.

This was a 204.4% increase in losses, having posted Ksh276.3 million  for the financial year ended December 2016.

Deacons East Africa Limited, initially Deacons Kenya Limited, has been operating in East Africa since 1958.

At a time, it held 44 stores, holding the franchise for at least 10 fashion brands, selling and distributing in Kenya, Uganda, Tanzania, Rwanda and Burundi.

Last year however, it had to sell off Mr. Price stores to Mr. Price Kenya Ltd (MRP) which is owned by Mr. Price Group based in Durban, South Africa.

The transfer however left Deacons shouldering the liabilities that had been accrued by the 11 Mr. Price stores before February 2018.

Barely a month later, Deacons had to let go of the Baby Shop and Angelo store at the Junction mall, 4U2 at Capital Center and Discount Store at Thika Road Mall.

[See Also: Nairobi fashion company, CO-BE, rebrands as it eyes mass market]

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Mike Njoroge
Mike Njorogehttp://www.businesstoday.co.ke
Mike Njoroge is the founder of Daystar Oracle and FootballTriangle. He is passionate about news, religion and sports. He can be reached at: [email protected]
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