How Studio 88 became a growth engine for Mr Price

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When Laurence Wernars opened the first Studio 88 store in Johannesburg’s bustling Smal Street in 2001, few would have predicted that the urban fashion retailer would one day become one of South Africa’s biggest retail success stories.More than two decades later, Studio 88 has evolved from a single sportswear outlet into a retail group with more than 1,000 stores, multiple fashion brands and a reputation for making international sportswear labels accessible to value-conscious consumers. Its journey has included one of the most successful acquisitions in South African retail history.Four years after acquiring a controlling 70% stake in Studio 88 for R3.3bn, Mr Price Group recently completed the purchase of the remaining shares, taking full ownership of the business. The acquisition has already transformed the Durban-based retailer’s growth profile, expanding its customer base, diversifying its merchandise offering and contributing significantly to earnings.The story began in the early 2000s, when branded sportswear was largely confined to premium shopping centres and carried price tags that placed it beyond the reach of many South Africans. Studio 88 identified an opportunity to bridge that gap by offering global brands such as Nike, adidas and Puma at competitive prices in locations closer to underserved communities.The strategy proved remarkably successful. As global sneaker culture and athleisure gained popularity among younger consumers, Studio 88 built a loyal following by making aspirational brands more accessible. Studio 88 expanded aggressively across South Africa, along the way building complementary retail chains, including footwear retailer Side Step, fashion retailer Skipper Bar, and, in 2021, it acquired John Craig. Studio 88 recently opened its flagship store in Sandton City. By the time Mr Price came knocking in 2022, Studio 88 had established itself as the country’s largest branded fashion and sportswear retailer, with 778 stores and a loyal customer following.Studio 88 has added to the Mr Price growth story. Management has continued to execute on the expansion strategy while maintaining strong profitability— Stephan Erasmus, investment analyst at AnchorThe acquisition has exceeded expectations. According to Justin Hollis, portfolio manager at Abax Investments, Studio 88 has significantly strengthened Mr Price’s growth trajectory.“Studio 88 has expanded Mr Price’s revenue base and store footprint, broadened its customer and merchandise mix, and added meaningful earnings,” he said.“Studio 88 has added to the Mr Price growth story,” said Stephan Erasmus, investment analyst at Anchor. “Management has continued to execute on the expansion strategy while maintaining strong profitability.”Analysts say Studio 88’s retail brand is the biggest within the portfolio of the companies Mr Price has bought and has exposed the retailer to a different customer — one prepared to spend more on branded footwear, apparel and sportswear. This differs from Mr Price Apparel, whose ranges are almost entirely private-label. Although Studio 88 is inherently more discretionary and cyclical than Mr Price’s core value offering, Erasmus said that given the disclosed track record the company is “nonetheless resilient; it grew its store base and delivered double-digit profit growth in FY26, a year the group described as a muted discretionary environment”. Matt Warriner, Mr Price Group head of investor relations, said, “Studio88 has been a really good acquisition. They’ve got a very strong management team who know their customer very well, and we couldn’t have asked for more from them over the last couple of years. This has been not only our largest acquisition locally but has also been tremendously successful.” With the acquisition of the remaining stake in the Studio 88 group completed, the company is now entering a different phase. While customers may notice little difference inside stores, significant changes are taking place behind the scenes.Studio 88 is being integrated into Mr Price’s logistics and distribution network, allowing the group to benefit from shared resources while maintaining Studio 88’s independent brand identity.Warriner said customers should not expect noticeable changes. “Absolutely nothing changes in terms of what the customer experiences. The same management team continues to run the business.”Intensifying competition in branded sports footwear more broadly — including from international online retailers — could erode Studio 88’s positioning regardless of ownership structure— Justin Hollis, portfolio manager at Abax InvestmentsAnalysts see opportunities in expanding the product range at Studio 88 group. “Full ownership removes the minority earnings leakage and unlocks operational levers — particularly private-label growth and credit — that were more constrained under the prior ownership structure,” said Hollis.Private-label penetration within Studio 88 is currently low and has been identified as a meaningful lever for both revenue growth and margin expansion, he said. “In summary, the most material synergy levers are private-label penetration, credit extension and overhead alignment — all of which are incremental improvements to an already profitable business rather than transformational restructuring.”However, Hollis warned that a higher private-label mix could, over time, erode the branded identity that differentiates Studio 88 from Mr Price Apparel — particularly if brand partners perceive a shift in strategic priorities. “Relationships with Nike, adidas and other international brands are the foundation of Studio 88’s competitive positioning.”Mr Price could also introduce credit, another growth lever not currently available within the Studio 88 business. At present, Studio 88 trades almost exclusively on a cash basis. Warriner said introducing credit is not currently planned; it remains an option that could unlock additional sales over time.With Studio 88 and Skipper Bar operating in one of the highly competitive retail segments, Hollis said TFG’s partnership with JD Sports Fashion is flagged as a significant competitive threat likely to take market share from Studio 88 in branded sportswear. “Intensifying competition in branded sports footwear more broadly — including from international online retailers — could erode Studio 88’s positioning regardless of ownership structure,” he said.Business Times