Mr Price makes its first big purchase in more than 20 years
It is buying value fashion retailer Power Fashion, which has 170 stores across Southern Africa
Mr Price, the specialist in mid-range clothing, sports goods and homeware, is buying value fashion retailer Power Fashion in its first purchase since the 1990s, saying the new acquisition will fit well with the group.
Mr Price CEO Mark Blair announced this at the company’s half-year results on Thursday. According to Mr Price, the deal, which is subject to approval of competition authorities in SA and Eswatini, will come into effect in April 2021 to align with the group’s 2022 financial year.
He said many people haven’t heard of the group that sells affordable clothing. “It is one of the names under the radar. It has been an extremely impressive performer over time.”
The Durban-based Power Fashion has 170 stores across Southern Africa.
This will be Mr Price’s first purchase since it bought discount homeware provider Sheet Street in 1996. The transaction cost would be 4% of Mr Price’s market capitalisation
Blair said Power Fashion clothing prices are “significantly lower” than Mr Price’s. He also said the retailer, which also has a presence in Lesotho and Swazliand, “is not a Covid-19 casualty ... it is not a fixer upper.” Power Fashion is an existing business with attractive scale and available at a reasonable acquisition price, he said
Mr Price feels the company has significant growth opportunities — “perhaps exceptional”. The group also has lower gross margins.
Blair said the company would not convert the Power Fashion stores into Mr Price stores, because, “There is very little reason to tinker with a successful model.”
He said Mr Price would resist, at all costs, forcing itself onto the group and would let existing management run the company
Blair also reiterated that Mr Price is comfortable staying and expanding in SA where almost 93% of its existing business is based.
Noel Otto, CEO and majority shareholder of Power Fashion, said: “It has been an incredible journey building our business into what it is today. Our team is immensely proud of what we have achieved. In some ways, the journey has only just begun, and I couldn’t think of a better way forward than for Mr Price to take the baton and continue the growth trajectory.”
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