Mr Price acquires Power Fashions
Mr Price buys family-owned retail chain that offers more than just clothing.
Mr Price announced on 26 November that it had acquired Power Fashions, a family-owned retailer with 170 stores across Southern Africa.
Durban-based fashion retailer Power Fashions is a value-focused and cash-based retailer, with a customer base consisting of low- to middle-income households. Apart from fashion apparel, the company offers cellular products, basic household items, value cosmetics, electricity and “other opportunistic products”, Mr Price said in a statement.
Mr Price said Power Fashion’s differentiated business model gives the group access to a wider customer base and the opportunity to significantly scale further. The retailer’s merchandise is fashionable, but not fashion forward. It focuses on the deep value segment of the market and its price positioning is strongly aligned to its target customer base, the group said.
Power Fashion is a high-performing business and is expected to contribute 7 percent to the group’s revenue. Power Fashion stores are typically on the high street and in community-centred malls, rather than in regional and super-regional locations.
The group says Power Fashion’s “strong track record” eliminates the need to implement a turnaround strategy, avoiding the associated management distraction and integration costs. Power Fashion’s management team and employees will be transferred to Mr Price and a new managing director will be appointed.
Mr Price Group CEO Mark Blair says that Power Fashion’s strong executive management makes the group comfortable with leaving Power Fashion to its own devices, ensuring that there are no disruptions in the fashion retailer’s operations.
The value of the transaction is approximately 4 percent of Mr Price’s market capitalisation of R39.7 billion. The transaction is expected to be completed in April 2021, subject to approval from the country’s regulatory authorities.
Looking forward, Mr Price continues to be cautious of continued tough trading conditions relating to the ongoing challenges presented by Covid-19. The pandemic and lockdown restrictions wiped R1.8 billion off the group’s sales in April, as its stores were forced to close.