Trendy Wear Meets Kitchenware: Mr Price Lands Deal To Buy Yuppiechef
A surprise acquisition deal involving a clothing retailer and an e-commerce startup best known as a kitchenware e-tailer is all but done in South Africa.
Durban-based Mr Price has today revealed in a JSE Sens statement that it has entered into an agreement to purchase 100 percent of the issued share capital of local online kitchenware pioneer, Yuppiechef.
In its Sens, Mr Price mentioned that it will be paying approximately 1 percent of its market capitalisation in cash to acquire Yuppiechef. As of Friday, March 12, Mr Price had a market capitalisation of just under ZAR 47 Bn (USD 3.1 Bn) on the Johannesburg Stock Exchange (JSE). This would imply that Mr Price is acquiring Yuppiechef for around ZAR 470 Mn (USD 31 Mn).
Yuppiechef is an online retailer of kitchen and homeware products founded in 2006 by Andrew Smith and Shane Dryden in Cape Town, South Africa. The business has two primary operations: Yuppiechef Online, the retail division comprising the online platform and seven stores, as well as a wholesale division that develops and imports branded goods for wholesale distribution.
Originally run from Smith’s home, Yuppiechef was one of a few experimental e-commerce projects initiated by the co-founders who were running a web development agency at the time. Interestingly, there are reports that the first Yuppiechef deliveries were packed and shipped from Smith’s lounge
Despite starting as a pure e-commerce company, Yuppiechef has since 2017 morphed into an omnichannel retail platform.
“The retail division represents 85 percent of turnover (70 percent via e-commerce) and has been a pioneer of online retail in South Africa, consistently winning awards throughout its history,” the JSE-listed Mr Price said in a statement to shareholders.
The deal, Mr Price said, will allow it to target a higher LSM customer base. It added that the deal meets its “strict investment criteria”, which guide its “capital allocation decisions and these have been applied with the same disciplined approach in the case of Yuppiechef.”
“This will allow Mr Price to expand in South Africa, in line with its strategic objectives, through an established, high-growth omnichannel brand. Profitability is a key factor in the group’s consideration of any venture, and it is satisfied with Yuppiechef’s positive bottom-line performance and prospects for margin expansion,” the clothing retailer stated.
Mr. Price, which has been operating since 1985, trades predominantly in South Africa as well as through owned and franchised stores across up to a dozen African markets. It is best-known as a clothing, footwear, cosmetics, and accessories retailer that offers on-trend and differentiated merchandise to women, men, and kids.
According to Mr Price, the acquisition is strategically aligned to the group and meets its investment criteria, as well as its expansion goals.
“In November 2020, Mr Price communicated its ambitions to invest in growth opportunities in specific segments of the market through both organic and acquisitive growth avenues. These opportunities are informed by an extensive period of research which the group believes will shape its future growth trajectory,” it says.
“Within the homeware market, the opportunity to gain access to a higher LSM customer base, enabling the growth of its share-of-wallet through aspirational value spending, was identified,” it adds.
According to the details of the acquisition, the Yuppiechef management team will continue to run the business with the full support of the executive team of Mr Price. It is also understood that the deal is subject to regulatory approval, including from the Competition Commission, as well as unspecified commercial conditions being met.
Commenting on the deal, Yuppiechef’s Smith says the “timing is right” for the company to move forward with its growth ambitions with a partner that “has a shared vision and the resources to help [it] achieve this.”
“I am excited about our future as a part of the Mr Price Group. [It is] a business which prides [itself] on innovation and growth and we are strategically aligned in our plans. We share similar cultures and values which will make this an easy fit for both parties,” adds Smith.
Featured Image Courtesy: Fibre2Fashion
