Clothing line retailer Deacons East Africa could be put under administration due to financial difficulties, a notice has said.
The board of directors, in a public announcement in the media, said the common resolution was arrived at last Friday.
The board is further considering to appoint Peter Kahi and Atul Shah of PKF Consulting as joint administrators of the company.
The Insolvency Act No.8 of 2015 gives companies going through financial distress an opportunity to explore the possibility of rescuing the firms.
"The primary objective of placing the company under administration is to enable it achieve a better outcome for the creditors than would likely to be the case if the company were to be liquidated,"
Deacons CEO Muchiri Wahome said in a statement.
In the six months ending June 30, the fashion vendor registered a loss of Sh229.5 million compared to Sh180.4 million reported in the same month in 2017.
The NSE listed firm attributed the loss to closure of operations of Mr Price that pushed down revenues by 20.7 per cent on the decrease of
net sales.
The sale of Mr Price stores to the franchise owner based in South Africa earned the garment retailer Sh133.3 millionThis year alone, the company has had plans to close about four stores as it seeks to cut on operation cost.
The four include the Angelo store at the Junction Mall which will be converted into an F&F store, as well as the baby shop store also at the Junction.
Others are 4U2 store at the Capital Centre mall on Mombasa Road and a discount store at the Thika Road.
Prior to the closure of the poorly performing stores, Deacons had in May 2017 retrenched five senior managers on grounds of a depressed trading environment.
Speaking to the Star in May, Wahome said the company plans to launch an e-commerce platform, and increasing international brands under its portfolio to replace Mr Price and to scale sustainable growth. Some of the international brands include F&F, Adidas, Deacons Kids and LifeFitness
The company’s stock has dropped 97 per cent from the listing price of Sh15 per share in 2016 to Fridays Sh0.45. If board intention is successful, Deacons will be the third NSE listed firm to be put under administration this year after debt laden ARM Cement.