East Africa’s leading apparel and household goods retailers, Deacons East Africa, plans to use the rise of the middle class and e-commerce to expand its market by 2020.
Capitalizing on its vision of passionately connecting customers to their desired lifestyle, the company’s Chief Executive Officer Muchiri Wahome told investors on Monday.
“Deacons will continue to expand its store network over the coming years. We are targeting 4-5 new stores per annum from 33 to 60 by 2020,” he explained at an Investor Briefing before it’s listed on the Nairobi Stock Exchange on Tuesday.
Deacons has franchises for a number of South African brands, including Mr Price, Truworths, Woolworths, Identity, Sheet Street, 4u2,BabyShop, Angelo, Reebok, Addidas, Lifeftness and Bossini.
“Kenya’s middle class is rapidly expanding driving greater demand for better quality goods, which includes a growing preference for international branded apparel and footwear. We plan to intensify efforts in deployment of electronic channels and create customer loyalty programme to ensure our customers are kept happy, satisfied and engaged,” he added.
Jedidah Thotho, Retail Director on the company listing, “This is a very monumental time for us. It is a big milestone we hit on Tuesday.”
Peter Gichumu Njoka, the Chair, on why they have occasionally postponed plans to list at the Nairobi bourse, “It was about the best interest of the shareholder. To get a better product in line with our mission to making our clients looking good and making them feel good.”
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As it gets listed on the NSE the firm will list 123, 558,228 shares at Sh15 each, giving it a valuation of Sh1.85 billion according to Andre De Simone, CEO, Kestrel Capital, the transaction advisor.
Deacons has been trading its shares over the counter since 2010, after it floated a public offer which raised Sh700 million to fund expansion.
“The growths prospective are positive,” said Simone. “Listing at the NSE will enhance its public profile and reputation including increased brand awareness and access to capital markets he added.
Deacons Chief Executive Officer Muchiri Wahome, “The opportunity and growth is immense, our growth will be in twofold by 2020.”
The shares will be listed on the alternative investment market of the NSE. Listing by introduction indicates the firm will not be raising additional capital, but instead creating an opportunity to bring on board new investors.
Deacons posted a net profit of Sh113.8 million in 2015, driven by a 23 percent jump in revenues which stood at Sh2.4 billion.
Deacons’ net revenue grew 13.2 percent in the first quarter of 2016 to KES 472 million following the opening of 8 stores since the same time last year. Gross margins were good at 53 percent ahead of 2015 full year margins of 47 percent and gross profit margins of 35 percent in the first quarter of 2015.
Deacons opened an Adidas/Reebok outlet and a Bossini store at The HUB in Karen and plan to launch four stores at the Two Rivers Mall as well as a Mr Price and a Bossini store at the Kigali Heights mall in Rwanda in September.
Read:
- Deacons Opens Reebok and Bossini Store at the Hub in Karen
- Deacons Records 73 percent Jump in Profit After Tax driven by Growth in Sales
The listing is being supported by Kestrel Capital as the transaction advisors; Coulson Harney as the legal advisors, Deloitte and Touché as the reporting accountants and Engage Burson-Marsteller as the Communication Agency.
Deacons opened its first store in 1958 when it was the franchise holder for the Marks & Spencer brand.
