Deacons  eyes a future in online shopping to boost sales

East Africa’s leading apparel and household goods retailers, Deacons (East Africa) Plc (NSE: DCON) is trying to capitalise on the online shopping market, to boost its sales and minimise costs.

The firm mulls at activating an online portal joining other online shopping platforms like Jumia where they will be taking online orders and making doorstep deliveries.

Deacons has 98 percent of its stores located in upmarket malls and is currently struggling to increase sales due to low customer numbers.

The cost of developing the online platform is approximated between KES 10.32Mn – KES 15.48Mn with the platform expected to take at least two years to increase sales.

In 1H17, Deacons (East Africa) Plc reported weak Earnings Per Share(EPS) of KES -2.09 (-243% y/y) on the back of a depressed operating profit (-32% y/y), a hike in operating expenses (+12% y/y)  as well as a tough operating environment.

Operating expenses were driven by a staff rationalization programme that commenced in June 2017 as well as an increase in the number of stores leading to incremental costs.

Genghis Capital Analysts are of the view that,going forward, they do not expect a quick turnaround for the firm as the online platform will take a while to accrue benefits from increased sales. “Additionally, once the online platform is up and running, the firm will face competition from other cheaper alternatives with increased online shopping by the “affluent young clientele”that Deacons is targeting.”