Mr Price says higher apparel, homeware sales behind surge in profits despite tough times faced by consumers. File Photo: IOL

JOHANNESBURG – Higher apparel and homeware sales growth boosted Mr Price’s profits and extended its market share during the half year to September. 

Mr Price, which is known for its focus on value, yesterday posted an 11.6 percent growth in headline earnings a share and dividend in the half year despite consumers grappling with a constrained economic environment.

Chief financial officer Mark Blair said sales growth in the apparel and homeware segments surged ahead of the market, signalling market share gains. “Independent research has confirmed that consumers’ perception of MRP’s quality and fashion has improved relative to our competitors and that our price positioning has been further entrenched,” said Blair.

The group said its headline earnings a share and dividend rose to 494.3 cents and 311.4c respectively. Diluted headline earnings per share increased by 11.1 percent to 482.4c.

“To deliver double-digit earnings and dividend growths in a tough economic and retail environment is a pleasing result,” Blair said, who will replace Stuart Bird as chief executive at the end of next month.

South African consumers are under strain with the VAT increase implemented in April, steep fuel hikes and high unemployment.

The apparel business, which comprises Mr Price, Milady and Mr Price Sport grew retail sales and other income (RSOI) 6.2 percent to R7.3 billion. Operating profit increased 11.2 percent off a strong base, particularly in MRP Apparel and Miladys.

The home segment, which includes Sheet Street and Mr Price Home increased RSOI by 7.2 percent to R2.4bn. 

Operating profit increased 13.8 percent and the operating margin increased to 14.3 percent from 13 percent. Earlier this month The Foschini Group reported a 14.3 percent growth jump in headline earnings to R1.2bn in the half-year to September. 

It said retail turnover in SA grew by 8.4 percent, London operations reported turnover growth of 50.7 percent, and Australian operations reported growth of 170.7 percent.

However, Woolworths fashion, beauty, and homeware struggled in the 20 weeks to November as sales declined 3.3 percent.

Yesterday, Mr Price said its revenue grew 7.8 percent to R10.5bn supported by retail sales increase of 6.6 percent to R9.7bn. The group said cash sales, which constitute 83.4 percent of total sales, grew 7.5 percent while credit sales increased 2.2 percent.

Bjorn Samuels, an equity analyst at Argon Asset Management said Mr Price along with a handful of other retailers were the beneficiaries of downtrading, especially as consumers searched good value for money. 

Mr Price shares rose 6.14 percent on the JSE on Thursday to close at R251.50.