Clothing and consumer goods retailer Deacons has posted a Ksh33.27 million ($386,813) loss after tax for the period ended December last year on account of one off costs associated with new retail stores in Rwanda and Kenya and the restructuring of its Tanzania operations.

The company, which posted a profit after tax of Ksh144.59 million ($1.6 million) for the period ended December 2011, said that its business was also adversely affected by high inflation and reduced customer demand.

Losses from discontinued operations stood at Ksh4.9 million pushing its total losses for the year to Ksh38.05 million ($442,295) compared to total a profit of Ksh112.64 million ($1.3 million) over the same time period the previous period.

“Total operating expenses increased by 31 per cent due to full year operation of eight new stores in Kenya and Rwanda whose benefit has not yet been actualized. The key increase in costs relates to rental and staff costs for these new stores,” said the clothing and consumer goods retailer in a statement.

Two and a half years ago, Deacons allotted 11.26 million shares to the public through a share offer that was seeking Ksh800 million ($9.9 million) through the sale of 12.8 million shares but managed to raise Ksh704.24 million ($8.7 million).

The move was intended to help it increase its store footprint to over 50 stores in East Africa and particularly in Uganda and Rwanda over a five year period.

“The group registered a loss on its continuing operations before taking into account a loss arising from the restructuring of its Tanzania retail operations,” said Deacons in the statement.

Its revenues for the period ended December 2012 rose by a marginal 2.7 per cent to Ksh2.48 billion ($28.9 million) from Ksh2.42 billion ($28.4 million) over the same period the in 2011.

The company said that it borrowed to support expansion and bank interest rates increased significantly to Ksh70.6 million ($820,657) for the period ended December last year from Ksh22.5 million ($264,494) in the prior year.

Deacons, which said that it had withdrawn operations at Freedom City Mall in Kampala, indicated that it could close down more non-performing stores in the region to cut costs even as it forges ahead with plans to open two new ones at the new Thika Road Mall this year.

It said that business through to June this year was negatively affected by elections in Kenya but that consumer confidence was expected to pick up even as it launches new brands Bossini and Zara Fashions before end of this year.