Banele Ginindza
RETAILER Mr Price yesterday delivered a strong set of annual results.
The group posted diluted headline earnings a share of 865.1c, up 21 percent for the year to March and dividends a share of 580c, up 20.3 percent.
Mr Price shares ended the day 2.39 percent higher at R235.49.
Mr Price has achieved a 29-year compound annual growth rate in headline earnings a share of 23.3 percent and and dividends a share of 25 percent, according to the company.
Chris Gilmour, an investment analyst with Absa Asset Management Private Clients, nearly ran out of accolades in describing the earnings performance of the retailer.
“They are phenomenal, nimble, clever, innovative… they are always thinking ahead,” Gilmour enthused.
He said that Mr Price was ahead of the pack not only on cheaper price offerings but because consumers went through the doors, in South Africa and the rest of the continent, for up-to-date fashion trends.
“People do not go to Mr Price because it is cheap, it is a destination shop, they have got cheap fashion at the right price, they are recognised for their fashion trends in the rest of Africa,” he added.
Confidence
He singled out the online payment strategy and delivery systems as another innovation that boosted the confidence of consumers with the retailer.
Mr Price grew total revenue in the year to date by 13.9 percent to R18.1 billion and retail sales increased by 13.5 percent (comparable stores 9.2 percent) to R17.3bn. Cash sales grew by 14.9 percent, ahead of credit sales of 7.5 percent, and constituted 81.9 percent of total sales.
Gilmour was full of praise for the retailer’s strategy of minimising the credit sales only enough to generate significant revenue but not to be too heavy as to weigh down cashflow.
In its results, the retailer – which owns Mr Price fashion, Mr Price Home, Sheet Street, Milady’s and Mr Price Sports – said the opening of 76 new shops and the closing of 5 stores resulted in weighted average trading space increasing by 5.1 percent and the group operating 1 150 corporate-owned and 15 franchise stores.
The group said it was setting aside R3.5bn in support of its growth strategy over the next five years.
This included new enterprise resource planning and merchandise planning systems and a new distribution centre.
The positive earnings growth of the first half of the year continued and the company achieved a 22.4 percent increase in profit attributable to shareholders in the second half of the year.
“While we have identified opportunities for improvement, we are very satisfied with the results achieved in an environment in which the economy and consumers are struggling,” said Mr Price chief executive Stuart Bird.
Sales to customers outside South Africa, including the acquired Zambian franchise operations, grew by 24.8 percent to R1.5bn.
The retailer said trading in Nigeria and Ghana in the second half was challenging as a result of their weakening currencies and rising inflation.
Bird said that the factors impacting the local economy and consumer environment were expected to continue for the forthcoming financial year and the group anticipated tough trading conditions.