This will further accelerate the business’ impressive track record, says CFO Mark Stirton.
Mr Price has confirmed its decision to acquire 70 percent of Blue Falcon Trading 188, which owns the Studio 88 group of businesses.
The R3.3 billion purchase represents approximately six percent of Mr Price’s market capitalisation – with the transaction being fully funded through existing cash resources of the group.
Mark Stirton, CFO Mr Price Group, says, “Mr Price has a stated vision of becoming the most valuable retailer in Africa. After much research, we believe the Studio 88 Group contributes toward that pursuit. On conclusion of the transaction, Studio 88 Group would be the second largest business by turnover and gives Mr Price Group access to the aspirational value segment of the market, an area where it is currently underrepresented. South Africans are brand conscious, particularly when it comes to footwear, which Studio 88 is particularly strong in, being the largest independent branded leisure, lifestyle and sporting retailer in South Africa.”
“This acquisition opens the door to this material branded merchandise segment and when combined with our corporate resources, will further accelerate the business from its already impressive growth track record.”
The Studio 88 Group is the largest independent retailer of branded leisure, lifestyle and sporting apparel and footwear in the country, generating revenue of R5.6 billion for the financial year ended 30 September 2021 and operating in excess of 700 stores.
It is a founder-led business which has been operating in Southern Africa since 2001 and its founder, Laurence Wernars, will continue running the business.
Laurence says, “We are delighted to be partnering with an iconic South African retailer who has the vision and retail expertise that will be key to realising our considerable trading opportunities. I am very confident that there is strong cultural alignment with our new strategic partner and with our combined skills, we can accelerate our growth and contribute meaningfully to Mr Price achieving their vision.”
The seven senior management team members who are shareholders will remain in their current roles and as shareholders.
The inclusion of the Studio 88 Group could increase Mr Price’s annual revenue to over R28 billion and could prospectively become the group’s second largest of nine trading divisions. Mr Price’s store footprint would increase to more than 2,400 stores and the group will employ more than 25,000 people.
Mr Price Group CEO Mark Blair says, “The partnership with Studio 88 Group gives Mr Price an ideal entry into the high growth urbanwear and athleisure segments of the market, which present us with a significant non-competing channel. We will continue to be a predominantly private label group, but our ‘Value Champion’ purpose can also be lived out through the aspirational fashion market, and we are very excited about these prospects.”
He adds, “What attracts us to the Studio 88 Group is their deep understanding of trend conscious South African consumers and their ability to address their needs via their various trading formats. We also share a similar DNA, both being founder-led businesses intent on offering customers superior value and have high performance cultures.”