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Deacons HY17
Pesa Nane
#1 Posted : Wednesday, August 30, 2017 8:45:34 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
Pesa Nane
#2 Posted : Wednesday, August 30, 2017 8:53:49 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Quote:
Commentary of the Performance
The overall retail trading environment during the period under review was characterized by extraordinary and exceptional events that adversely affected the business, key among them being as follows:

(i) The Country experienced a prolonged drought Laughing out loudly Laughing out loudly that led to higher food prices. This in turn led to an increase in overall inflationary pressure which rose to a high of 11.7% in May 2017. The reduction in disposable income, coupled with the lack of consumer credit from the banks had a direct impact on customer shopping trends.

(ii) Whilst the overall unit sales increased by 14% and the total number of transactions by 9%, the average unit price sold reduced by 13% with a corresponding drop in per customer average spend by 17% compared to the same period in the previous year.

(iii) The retail space increased from 169,516 square feet in 2016 to 190,341 square feet in 2017 on account of 8 additional stores.
However, a marginal increase of 5% in revenue was not sufficient to cover the incremental cost from these stores. The significant
increase in overall availability of retail space as a result of the development of new malls was not proportionately matched by an
increase in the number of shoppers. The resultant cannibalization led to a drop in traffic into all malls.

(iv) The non-performance of major anchor tenants reduced traffic into the malls. With 98% of our stores operating in malls whose
anchor tenants are experiencing stocking challenges, data shows that footfall has decreased by over 60% with customers choosing to
visit other facilities.

(v) For the first six months of the year, the Country was affected by the national elections fever which reduced consumer demand and
spending.

(vi) Aggressive sale offers in Q2 reduced the average gross margins to 39% but enabled the business to flush out stock and improve liquidity.

On a positive note, the two new F & F stores have registered very encouraging results indicating that its value proposition was well
received and has great potential to grow into a chain of stores. The Bossini, Adidas and Lifefitness brands have also posted good results signaling that the “wellness and leisure” market segment will continue to present growth opportunities.

The Revenue for the period increased by 5% to Kes 1.077B compared to Kes 1.026B in 2016. This marginal growth was attributed to the
slow start of the four stores at the Two Rivers Mall and the issues discussed above.

The Net Operating Profit decreased by 32`% compared to the same prior year period following a reduction in margins by a major brand.

This reduction of margins did not lead to an increase in volume sales and has had a significant negative impact on the results.

The Total Operating Expenses increased by 12% as a result of the increase in number of stores and the staff rationalization program that was implemented in May 2017. The Group registered a Loss After Tax of Kes 180.4M compared to a loss of Kes 52.6M in 2016.
Pesa Nane plans to be shilingi when he grows up.
Pesa Nane
#3 Posted : Wednesday, August 30, 2017 8:55:59 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Quote:
Future Outlook
As part of the restructuring initiatives and effort to return to profitability, the Company has trimmed its retail portfolio and reduced operating costs. The Board has approved the closure of the Angelo brand and has taken the decision to terminate the Babyshop franchise contract and source products directly from the open market in order to improve the overall value proposition of this business.

In continuation of this consolidation strategy, the Board is considering a plan to further rationalize its brand portfolio by the year-end. This program will see the savings from these measures shore up the liquidity of the Group and provide a platform for future growth. Plans to launch a proprietary e-commerce platform by Q1, 2018 are well underway with all other social media assets already activated.

With the completion of the elections, it is anticipated that the trading environment will improve and lead to a return in consumer
confidence ahead of the busy Christmas period.
Pesa Nane plans to be shilingi when he grows up.
alotoftalk
#4 Posted : Thursday, August 31, 2017 12:22:49 AM
Rank: Member


Joined: 8/27/2015
Posts: 138
Location: Harare
Pesa Nane wrote:
Quote:
Future Outlook
As part of the restructuring initiatives and effort to return to profitability, the Company has trimmed its retail portfolio and reduced operating costs. The Board has approved the closure of the Angelo brand and has taken the decision to terminate the Babyshop franchise contract and source products directly from the open market in order to improve the overall value proposition of this business.

In continuation of this consolidation strategy, the Board is considering a plan to further rationalize its brand portfolio by the year-end. This program will see the savings from these measures shore up the liquidity of the Group and provide a platform for future growth. Plans to launch a proprietary e-commerce platform by Q1, 2018 are well underway with all other social media assets already activated.

With the completion of the elections, it is anticipated that the trading environment will improve and lead to a return in consumer
confidence ahead of the busy Christmas period.


I don't understand their need to build their own e-commerce platform instead of either getting a white-label platform from say Jumia and branding it as their own.

Though e-commerce has its advantages which ideally work best for a data-driven business not already saddled with long-term leases.
Investment philosophy development in progress...
Pesa Nane
#5 Posted : Monday, October 09, 2017 12:01:39 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
Fyatu
#6 Posted : Monday, October 09, 2017 12:02:18 PM
Rank: Veteran


Joined: 1/20/2011
Posts: 972
Location: Nakuru
Hii company kwisha
Pesa Nane
#7 Posted : Thursday, December 07, 2017 3:41:23 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
obiero
#8 Posted : Thursday, December 07, 2017 4:51:19 PM
Rank: Elder


Joined: 6/23/2009
Posts: 8,190
Location: nairobi
Fyatu wrote:
Hii company kwisha

Kabisa
www.winda.co.ke
Pesa Nane
#9 Posted : Wednesday, January 17, 2018 3:04:45 PM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
Ericsson
#10 Posted : Wednesday, January 17, 2018 3:19:39 PM
Rank: Elder


Joined: 12/4/2009
Posts: 4,129
Location: NAIROBI
Pesa Nane wrote:



Company winding down slowly by slowly
VituVingiSana
#11 Posted : Wednesday, January 17, 2018 7:44:19 PM
Rank: Chief


Joined: 1/3/2007
Posts: 13,609
Location: Nairobi
Pesa Nane wrote:

What's going to be left of Deacons?
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
watesh
#12 Posted : Wednesday, January 17, 2018 9:26:13 PM
Rank: Member


Joined: 8/10/2014
Posts: 622
Location: Kenya
VituVingiSana wrote:
Pesa Nane wrote:

What's going to be left of Deacons?

A useless company. They are selling the golden goose...this stock is a SELL
obiero
#13 Posted : Wednesday, January 17, 2018 11:16:28 PM
Rank: Elder


Joined: 6/23/2009
Posts: 8,190
Location: nairobi
watesh wrote:
VituVingiSana wrote:
Pesa Nane wrote:

What's going to be left of Deacons?

A useless company. They are selling the golden goose...this stock is a SELL

Should be delisted
www.winda.co.ke
VituVingiSana
#14 Posted : Thursday, January 18, 2018 11:34:23 AM
Rank: Chief


Joined: 1/3/2007
Posts: 13,609
Location: Nairobi
I had bought Deacons when I was an unfocused investor who was a fan of Warren Buffett but NOT an adherent and used to buy all IPOs, PPs, etc.

Over time [post-KQ] I started reading more about HOW the Sage thought. I started a long and slow process of identifying what I should look at. I kept on making errors and also had "HOPE" for many shares (of poorly managed firms) bought at high prices.

Over time, I have divested myself of shares in firms like Deacons, KQ, ADSS, etc. These funds were re-invested in other firms where Good Governance was important. Other factors also come into play eg PER, NAV/share, sector, future potential, GoK influence/ownership, etc...

I own no more than 10 (significant to me) positions of which 5 constitute 80% or more in value.
I am a patient investor i.e. if the market doesn't see value but there's value then I am OK e.g. KenRe [Low PER, Decent Dividend, Moat, Debt Free, huge growth prospects, slow but steady growth, etc]

I see value in KK, I&M and NIC i.e. good growth potential in their niches. Potential takeover targets while remaining profitable.
I see EQT as one of my aggressive picks [expansion ex-Kenya with a solid Kenya franchise & smart CEO]
Plodders that generally do well [with occasional hiccups] like Unga.
TPSEA with a solid franchise/brand with good prospects especially when others will stumble. I expect TPSEA to pick up more properties when there's a downturn.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
Kwiklana
#15 Posted : Thursday, January 18, 2018 12:01:24 PM
Rank: Hello


Joined: 6/13/2017
Posts: 4
Thanks @VVS. I feel more educated.
alotoftalk
#16 Posted : Thursday, January 18, 2018 10:07:00 PM
Rank: Member


Joined: 8/27/2015
Posts: 138
Location: Harare
The dearth of the razor-thin-margin-consignment business model. It's no wonder competitor's like Vivo Activewear are expanding while they are shrinking.
Investment philosophy development in progress...
Ericsson
#17 Posted : Saturday, January 20, 2018 9:53:36 AM
Rank: Elder


Joined: 12/4/2009
Posts: 4,129
Location: NAIROBI
Bandia of the bandiest firm after Atlas
Pesa Nane
#18 Posted : Friday, February 02, 2018 11:46:44 AM
Rank: Elder


Joined: 5/25/2012
Posts: 3,476
Location: 08c
Pesa Nane plans to be shilingi when he grows up.
Ericsson
#19 Posted : Tuesday, February 13, 2018 11:46:52 AM
Rank: Elder


Joined: 12/4/2009
Posts: 4,129
Location: NAIROBI
http://kenyanwallstreet....ling-mr-price-franchise

Deacons East Africa, the Kenya-based company engaged in retailing of franchise products has announced plans to shut down four of its stores in some malls in Nairobi this year. The stores to be closed are; the Baby Shop and Angelo store at the Junction mall, 4U2 at Capital Center and Discount Store at Thika Road Mall.

The decision to close the stores comes barely a month after the NSE listed fashion retailer sold off its eleven Mr Price Kenya shops to South Africa’s Mr Price Group Limited, the franchise owner. Deacons has been operating the Mr Price franchise for 10 years and the deal is expected to be completed by April this year.

The company’s CEO Wahome Muchiri in an interview with Capital FM says the decision to shut down the four stores is largely driven by increased competition over the last few years.

“We are looking at the cost base, understanding what customers are looking for. I must say that competition is on the up, new brands are coming to the market so we have to respond to those requirements.” Wahome was quoted by Capital FM.

In the opinion of the CEO, Deacons had a tough year in 2017 because of the election cycle, suppressed consumer demand, and the collapse of anchor tenants in shopping malls such as Nakumatt Supermarket. In addition, Muchiri said that Deacons lost 100 days of trading due to frustrations brought about by political mobilisations that took place during the election period.

In May last year, Deacons had announced it would shut down undisclosed number of unprofitable stores due gloomy sales as a result of increased competition which forced the company to restructure its business model.
VituVingiSana
#20 Posted : Tuesday, February 13, 2018 12:17:51 PM
Rank: Chief


Joined: 1/3/2007
Posts: 13,609
Location: Nairobi
Ericsson wrote:
http://kenyanwallstreet.com/deacons-close-four-stores-nairobi-days-selling-mr-price-franchise

Deacons East Africa, the Kenya-based company engaged in retailing of franchise products has announced plans to shut down four of its stores in some malls in Nairobi this year. The stores to be closed are; the Baby Shop and Angelo store at the Junction mall, 4U2 at Capital Center and Discount Store at Thika Road Mall.

The decision to close the stores comes barely a month after the NSE listed fashion retailer sold off its eleven Mr Price Kenya shops to South Africa’s Mr Price Group Limited, the franchise owner. Deacons has been operating the Mr Price franchise for 10 years and the deal is expected to be completed by April this year.

The company’s CEO Wahome Muchiri in an interview with Capital FM says the decision to shut down the four stores is largely driven by increased competition over the last few years.

“We are looking at the cost base, understanding what customers are looking for. I must say that competition is on the up, new brands are coming to the market so we have to respond to those requirements.” Wahome was quoted by Capital FM.

In the opinion of the CEO, Deacons had a tough year in 2017 because of the election cycle, suppressed consumer demand, and the collapse of anchor tenants in shopping malls such as Nakumatt Supermarket. In addition, Muchiri said that Deacons lost 100 days of trading due to frustrations brought about by political mobilisations that took place during the election period.

In May last year, Deacons had announced it would shut down undisclosed number of unprofitable stores due gloomy sales as a result of increased competition which forced the company to restructure its business model.

I got into Deacons [Kestrel was the sponsoring broker] during the Private Placement. I got out at a loss after it listed and I saw the financials/prospects were going downhill. I had learnt a lesson from KQ... Abandon a sinking ship as soon as one can.

At this rate, Deacons might as well close up shop and save the shareholders more pain!
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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